Onome Amuge
Gold futures settled higher on Monday to record a seven-week peak as a weakened dollar and softened U.S treasury yields raised the precious metal’s appeal but appetite for riskier assets remained strong, analysts report.
Spot gold inched closer to the $1,790 level as it traded at $1,783.88 per ounce, its highest since February 25. US gold futures also gained 0.3 per cent at $1,788 per ounce to raise optimism for the troubled metal which had beforehand, suffered worrisome losses.
In a statement sighted by Business A.m, Ole Hansen Hansen, commodity analyst at Saxo Bank, a Danish online trading and investment bank, asserted that the fact that the yellow metal managed to break above $1,765 at the close of last week’s trade is likely to have attracted some renewed speculative buying from trend and momentum players as gold is being lifted by the continuous drop in bond yields.
“Most of these players are price-driven, so when the price tells them that there’s a change in the outlook, they have to get involved,” he added.
On the other hand, benchmark US treasury yields dipped towards the multi-week lows recorded last week. The dollar index also eased to over six-week low making gold less expensive for other currency holders.
Analysts opine that gold is on the pathway to another rally as it tops key resistance levels, creeping towards $1,800 an ounce but the duration of the metal’s rebound remains uncertain.
Michael McCarthy, head market strategist of UK-based financial services company, CMC Markets explained that the metal is currently gaining momentum buoyed by the combination of a weaker U.S dollar and easing interest rates, despite better economic outlook in the U.S and China, the world’s largest economies. McCarthy however advised investors to be cautious as the metal’s recent surge is likely to be in the short term.
