Gold prices hit 2-month high in international market due to a weaker dollar and dropping US yields
Gold prices have rallied significantly in the international markets in the past few days. According to industry experts, the price is expected to rise further in the coming weeks compared to the current levels. The precious metal may go up to $1,800 to 1,820 per ounce level.
On Friday, gold prices touched a two-month high at $1771.37 per ounce due to a continuous drop in the US Dollar. In April, gold prices have gained nearly 4%, after falling 6% in February.
Lukman Otunuga, senior research analyst at FXTM, stated that gold is driving its strength from falling US 10-year Treasury yields, a weakening dollar, and deteriorating economic condition in Europe due to COVID-19. Speaking to MarketWatch, Otunuga added if Treasury yields continue to retreat and the dollar further drops in the coming weeks, gold prices could go up to the $1,800 level.
As of now, the US dollar index is around 91.5 and the US yields have dropped around 10-basis points this week.
Experts have indicated that treasury yields moving below the crucial 1.60 percent mark has allowed gold to go beyond its 50-day simple moving average for the first time since February.
In addition, escalating US tensions with Russia and China have also amplified gold’s appeal and encouraged safe-haven buying in the international market.
On Thursday, Gold futures witnessed their biggest daily gain as prices settled at the highest in almost two months, as per media reports. Experts are suggesting that the price of the yellow metal will remain bullish by the next quarter as there is no potential resistance until the $1,800-mark.
Speaking to Kitco News, RJO Futures senior commodities broker Daniel Pavilonis said that if Gold closes above $1,815 next week, a momentous move to the highs is expected which can help in continuing gold’s secular bull market.
This development has come amid major concerns over surging inflation in countries globally due to economic repercussions of the COVID-19 pandemic. A resurgence of lockdowns and pandemic-related restrictions in various countries has once again crippled global business and economic growth. Meanwhile, China has permitted domestic and international banks to import large quantities of gold into the mainland with the aim of supporting global prices of the yellow metal. As per a Reuters report, about 150 tonnes of gold (worth $8.5 billion at current prices) is going to be shipped to the country by April-May after Beijing’s approval.