Gold prices appreciated on Monday to record their highest level in over three months following a dip in the dollar and the US treasury yields while concerns about the surging covid-19 cases in India and Singapore strengthened demand for the precious metal.
Spot gold climbed 0.6 per cent to $1,854 per ounce while US gold futures were up 0.8 per cent to $1,853.20.
Ole Hansen Hansen, commodity analyst at Saxo Bank, Danish online trading and investment bank, asserted that the fact that the yellow metal managed to break above $1,800 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.
Michael McCarthy, head market strategist of UK-based financial services company, CMC Markets explained that the metal which is often regarded as a safe-haven against rising inflation, is gradually gaining momentum buoyed by the combination of a weaker U.S dollar and easing interest rates. He however advised investors to be cautious as the metal’s recent surge is an indication of its volatility .
On his part, Bart Melek, head of commodity strategies at TD Securities, asserted that gold could start hitting technical levels above $1,850 which could propel it significantly higher.
Carsten Fritsch, precious metals analyst at Commerzbank, said said that he expects to see renewed speculative interest in the precious metal as prices have been given the green light to go higher.
While the gold market is seeing some new bullish momentum in an inflationary environment, some analysts also note that the precious metal continues to face some headwinds, namely growing competition from cryptocurrency.
Mike McGlone, senior commodity analyst at Bloomberg Intelligence, describes the $1,850 an ounce level as a “rounding error.” He added that the precious metal would be higher if it weren’t for bitcoin.
McGone further averred that gold is going to be boring for a while as the excitement and upside potential is shifting towards bitcoin,the new digital upstart.
Other precious metals also recorded gains as silver rose one per cent to $27.70 per ounce while platinum was up 0.5 per cent to $1,231.51 and palladium jumped 0.1 per cent to $2,895.61.