Source: MarketWatch
San Francisco— Gold futures climbed 1% Tuesday to close at a one-week high, with weakness in the U.S. dollar and global economic uncertainties combining to drive investment demand for the precious metal.
"Inflation fears, monetary policy around the globe is changing, and investors' sentiment toward owning gold has improved," said John Person, president of National Futures Advisory Service.
Taken together, "that continues to spark demand," he said.
Extending the previous session's gain of more than $6, gold for April delivery closed at $553 an ounce on the New York Mercantile Exchange, up $5.50. The contract, which ended the day at its highest level since March 7, recovered from an intraday low of $544.20.
"Physical buying and technical support ahead of $535 should continue to keep gold underpinned in the coming sessions," said James Moore, an analyst at TheBullionDesk.com.
But "the metal still remains vulnerable to further bouts of liquidation," he said, meaning the potential remains for gold to retreat back to the $495 to $500 range.
"Oil and the dollar will continue to play a heavy hand in gold intraday direction, while longer-term geopolitical unrest and concerns over oil prices will continue to draw investors toward safe-haven and anti-inflationary asset classes such as gold," said Moore.
Dollar drop
The dollar weakened against both the yen and euro on Tuesday, reacting to data from the Commerce Department showing that the U.S. current account deficit widened to a new record. See Currencies.
"The worse-than-expected February retail sales, coupled with the deterioration of the trade gap, delivered stark news to the cheerleading section of the U.S. economy," said Jon Nadler, an investment products analyst at bullion dealers Kitco.com.
"Structural problems continue to plague the U.S. currency and present vexing issues" for the Federal Reserve, he said.
So overall, the gold market is seeing "dollar-driven" demand, but "demand is really picking up as traders are beginning to wake up to the nice technical picture that is being painted here," said Dale Doelling, chief market technician at Trends In Commodities.
"New highs could be around the corner," he said.
Healthy weakness
Adding to gold's upbeat view, the metal has been in a "consolidation phase after a major price appreciation in the past 12 months," Person said. "This bodes well for bulls because gold demonstrates that buyers still dominate the market."
Taking a closer look, he notes that gold prices have shown "little follow through" when they trade in the low $540s and they bounce in the range between $536 and $570.
"This is a healthy sign and a clue that there is probably one more advance coming sometime this year," he said, pegging his minimum objective as $615 by October.
In other metals action Tuesday, May silver rose 8.8 cents to close at $10.245 an ounce. June palladium tacked on $5.20 to finish at $306.10 an ounce, extending the previous session's gain of 3.9%, while April platinum shed 50 cents to close at $1,022.60 an ounce. May copper moved 0.85 cent higher to close at $2.254 a pound.
On the supply side, inventories of copper fell by 3,828 short tons to 33,888 short tons as of late Monday, according to Nymex.
Gold inventories were down 16,075 troy ounces at 7.53 million troy ounces, and silver supplies stood at 126.7 million troy ounces, down 586,078 troy ounces
Share This Post
Choose Your Platform: Facebook Twitter Linkedin