Market digest

Gold hovers near 4-1/2-month high on tepid dollar

25 May, 2021 12:00 AM printer

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

Spot gold was up 0.2 per cent at US$1,883.21 per ounce by 3.01am GMT. Last week, gold prices hit their highest level since Jan 8 at US$1,889.75, report agencies.

US gold futures rose 0.4 per cent to US$1,884.30 per ounce. “The US dollar index remain relatively weak and the manufacturing and service PMI’s from the US 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 US$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 US 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 per cent to 1042.92 tonnes on Friday. Speculators raised their net long positions in Comex gold in the week ended May 18.

 


Top