Gold prices rose in trading on Monday to its highest level in more than a week, supported by the weakness of the dollar.
The rise in gold prices came despite higher US Treasury yields, which limited gains in dollar-denominated bullion.
Gold prices today
The price of gold futures contracts – for delivery next August – increased by 0.64%, equivalent to 11.40 dollars; to record $1,857.30 an ounce.
Gold prices ended last week’s trading with an increase of about 1.8%, achieving the first weekly gains since mid-April.
The spot price for the yellow metal also increased by 0.54%, recording $1,856.54 an ounce.
At the same time, the price of the silver futures contract – July delivery – rose by 0.68%, to reach $21.87 an ounce.
The spot platinum price also rose by 1.2%, recording $967.17 an ounce, and the spot palladium price jumped 2.38%, to $1991.19 an ounce.
Dollar Price
“The jury is still out on whether gold has weathered the storm in the medium term, or is only rising in response to the continued decline of the US dollar,” said chief analyst Jeffrey Haley.
The dollar index fell as investors continued to sell pressure; This reduced bets for additional dollar gains from higher US interest rates, while hoping that easing the lockdown in China could help global growth and exporters’ currencies.
A weak dollar makes bullion more attractive to overseas buyers.
US Bonds
“Before I turn structurally bullish, I will need to see gold holding onto its recent gains in the face of dollar strength, not dollar weakness,” Haley added.
The benchmark 10-year US Treasury bond yields stabilized after a series of losses that lasted 3 sessions; that limits the demand for zero-yield gold
Interest Rates
For his part, President of the Federal Reserve in St. Louis, James Bullard, reiterated his view, last week, that the US central bank should raise interest rates to 3.5% this year; To control high inflation more quickly.
Bullion tends to become less attractive to investors when US interest rates are raised; Because it produces nothing, however, it is seen as a safe haven asset during economic crises.
“The deteriorating macroeconomic outlook combined with rising inflation should remain supportive of gold, and the heightened risk of underperformance in equity markets has reinforced its attractiveness in risk diversification,” ANZ said in a note.
Source: XglobalMarkets
