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Gold prices hover near 4-12-month high on weak dollar, inflation jitters

Category: Economy

Date: 2021-05-24T09:47:46+0000
Gold prices hover near 4-12-month high on weak dollar, inflation jitters

Shafaq News/ Gold prices climbed on Monday to hover near a 4-1/2-month high, supported by a weaker U.S. dollar and growing inflationary pressure, while a slide in cryptocurrencies further lifted the safe-haven metal’s appeal.

Spot gold was up 0.2% at $1,883.12 per ounce by 0638 GMT. Last week, gold prices hit their highest level since Jan. 8 at $1,889.75.

U.S. gold futures rose 0.4% to $1,883.40 per ounce.

“The U.S. dollar index remains relatively weak and the manufacturing and service PMI’s from the United States and Europe actually raised the prospect of inflation in months to come,” Margaret Yang, a strategist at DailyFX said.

“Recent slide in cryptocurrencies also boosted the appeal of gold as an alternative investment asset. Gold’s upward momentum is very strong and it is likely to challenge a key psychological level at $1,900 in the days to come.”

The dollar stood near its lowest levels in three months against the resurgent euro and other European currencies, making gold cheaper for other currency holders.

Rising U.S. inflationary risks have spooked markets after data showed rise in consumer prices and pick up in factory activity, lifting gold’s appeal as an inflation hedge.

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6% to 1042.92 tons on Friday. Speculators raised their net long positions in COMEX gold in the week ended May 18.

Further contributing to gold’s move, Bitcoin fell 13% on Sunday, sending it down ~50% from the year’s high after Beijing stepped up its efforts to crack down on Bitcoin mining and trading.

Spot gold looks neutral in a range of $1,875 to $1,893 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

Elsewhere, palladium rose 0.4% to $2,794.18 per ounce, silver gained 0.7% to $27.71, and platinum climbed 0.1% to $1,167.99.

Source: Reuters

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