Gold futures were higher on Monday, posting their first gain in five sessions as weak dollar and low government bond yields helped revive some bullion buying after last week’s plunge.
The precious metal is receiving “support from falling Treasury yields,” said Michael Armbruster, managing partner at Altavest.
Yield on 10-year Treasury bonds TMUBMUSD10Y,
decreased by about 1.61%. Bond prices rise as yields fall. Meanwhile, according to the ICE US Dollar Index DXY, the dollar fell 0.3%.
A weaker dollar can make precious metals priced in currencies more attractive to overseas buyers, while lower yields can help lower the opportunity cost of owning lucrative debt-haven versus metals that do not offer a coupon.
In his market review, Edward Moya, senior market analyst at Oanda, said gold rose sharply after US Treasury Secretary Janet Yellen said Sunday: “I don’t believe inflation will be a problem, but if it becomes a problem, we are the tools. to solve this problem ”.
“It takes some persuasion, but investors are beginning to believe that the current resumption of trading and reports of soaring inflation do not necessarily mean a sharp rise in Treasury yields that will lead to a drop in gold,” Moya said.
Gold prices also rose due to “the demand for safe havens as India and other parts of the world grapple with an ever-increasing number of coronavirus cases,” said Chintan Karnani, research director at Insignia Consultants.
He believes that the price of gold this week will need to exceed $ 1,800 to “continue the short-term bullish trend.”
Monday gold for June delivery of GCM21,
rose $ 24.10, or 1.4%, to $ 1,791.80 an ounce, after hitting $ 1,798.90 during the day. The settlement was the highest for the most active contracts since April 21, according to FactSet.
Meanwhile, the July silver SIN21,
added $ 1.09, or 4.2%, to $ 26.96 an ounce – with prices hitting their biggest one-day gain and percentage gains and their highest since February.
Some market participants attributed the session hunt for silver and gold prices to the hunt after last week’s downturn.
“The bulls in gold and silver have regained a small short-term technical advantage,” wrote Jim Wyckoff, senior analyst at Kitco.com.
On Monday, gold and silver prices rose steadily, “due to some perceived trade hunting and amid bullish external market forces, which include a weaker US dollar index and … more resilient crude oil prices,” analyst Kitco wrote in Daily analytical note.
Nonetheless, Altavest’s Armbruster believes that “gold is still on the downside and Treasury yields are likely to rise in the coming months in anticipation of increased emissions from the US Treasury.” This is on condition that the Biden administration “can get its spending programs through Congress.”
Thus, “in the short term, we remain cautious, bearish,” said Armbruster.
Gold prices rose after the release of data on the manufacturing index of the Institute for Supply Management on Monday.
Last week, the most active gold futures fell 0.6% on the week, but showed a monthly rise of about 3% – the first monthly gain in a year – while silver ended its fall by about 0.8% on the week, reaching 5 ,five%. per month according to FactSet.
Other metals traded on the Comex include the July copper contract HGN21,
rising nearly 1.4% to $ 4.53 a pound, the most active contracting since February 2011, data from FactSet show.
The fundamentals for copper “are troubling because the global economy is just beginning to open up and renew itself,” BofA Global Research analysts wrote in an April 30 note. With this in mind, “we forecast a deficit in the copper market and further reserves. is decreasing this year and next ”.
June Palladium PAM21,
The shares rose 0.9% to $ 2,981.40 an ounce, with prices hitting another record high. Platinum for July rose 2.1% to $ 1,230.10 an ounce.