In-article:

Gold regains luster as dollar hits 1-month low


The price of gold rose more than 1% on Monday, boosted by a drop in the US dollar to its lowest level in a month, while concerns over economic growth kept demand for the safe haven bullion intact.

The price of gold rose on Monday as the weaker US dollar and concerns over the growth of the economy boosted the metal, although non-performing bullion pared its earlier gains on positive Treasury yields. Spot gold rose 0.6% to $1,855.87 an ounce at 10:04 a.m. ET (1404 GMT). Prices rose more than 1% and hit their highest level since May 9 at $1,865.29 earlier in the session. US gold futures gained 0.7% to $1,854.10. “There is a strong corrective rebound in gold as the US dollar is on a steep decline,” said Jim Wycoff, senior analyst at Kitco. ‚ÄúTrader and investor risk appetite remains far less than robust, prompting some safe-haven demand for gold. Investors are beginning to realize that inflation is going to be a problem for longer than just a transitional period.” Although gold is considered a hedge against inflation, it is very sensitive to rising US interest rates, which increase the opportunity cost of holding non-performing bullion. US Treasury yields rose, but the dollar fell to its lowest level in a month. A weaker dollar makes gold cheaper for holders of other currencies. “Although today’s rise is welcomed by gold holders, the precious metal’s advance will likely be limited by the fact that central banks in America and Europe have an obligation to raise their rates of interest over the next few months,” Rupert Rowling, market analyst at Kinesis Money, said in a note. Minutes of the US Federal Reserve’s May meeting, due for release on Wednesday, will be closely scrutinized for signs of how aggressively the US central bank plans to raise interest rates. Spot silver gained 0.4% to $21.84 an ounce, platinum firmed 1.3% to $967.84 and palladium climbed 2.4% to $2,010.69. Russia’s Nornickel, the world’s largest palladium producer, forecasts a global palladium market deficit of 100,000 troy ounces in 2022, lowering its estimate from its February forecast. (Reporting by Ashitha Shivaprasad Bengaluru; editing by Shailesh Kuber)



Source link -88