Gold hit its highest in a month yesterday, gathering momentum as a retreat in the dollar helped push prices through tough resistance at $1,322 an ounce and as fears abated that the US Federal Reserve will curb monetary easing.
Buying gathered momentum after prices beat two chart resistance levels — the first at $1,300 an ounce overnight in Asia, a level they repeatedly had tried and failed to break in the last month.
A later break above $1,322 took gold to $1,328.60, its highest since June 20. Spot gold was up 2.4% at $1,326.30 an ounce at 1441 GMT, while US gold futures for August delivery were up $33.20 an ounce at $1,326.10.
“Certainly for the time being the trend in gold has turned around to the upside,” Standard Chartered analyst Daniel Smith said.
“It’s really important that we hold above $1,322,” he added. “If we do, it’ll be the first time we’ve held above what was previously an important support level since we were up around $1,800.”
The dollar index fell 0.6% on Monday, extending losses after data showed US existing home sales for June fell 1.2% rather than the 0.6 gain expected.
Fed Chairman Ben Bernanke’s assurances last week that any withdrawal of US quantitative easing, a major driver of gold prices in recent years, would depend on economic conditions had already prompted a second week of gains in gold and continued to underpin the market yesterday.
“The Fed language had changed a bit – I think people got too gloomy about what the Fed was going to do. Below $1,200 was just too low given the backdrop of what it was likely to do,” Smith said.
Analysts have slashed their 2013 gold and silver price forecasts after sharp falls earlier this year and expect them to remain weak in 2014 as the US reins in monetary stimulus, a Reuters poll showed yesterday.
“We retain a negative outlook on gold as we continue to believe that inflation in the developed world will remain largely static while nominal yields will move up, pushing real yields higher and increasing the opportunity cost of holding gold,” Credit Suisse analyst Tom Kendall said.
In number one gold consumer India, the central bank moved to tighten gold imports again in an attempt to rein in a record high current account deficit. It asked all nominated banks and agencies to export at least one-fifth of every lot of imported gold.
Among other precious metals, silver rose 4.7% to $20.37 an ounce, outperforming gold and helping pull the gold/silver ratio — the number of silver ounces needed to buy an ounce of gold — back from Friday’s three-year high at 66.6.
Platinum rose to its highest since mid June at $1,449.50, up 1.7%, and palladium jumped to its strongest in nearly six weeks at $750.50, and was later at $746.
Reported by: Caye Global News, Gulf Times
Oil, Gas and Petrochemicals by Dr. Theodore, now available on these stores:
Oil – Gas Exploration & Drilling: