Gold is looking to build on its first weekly rise since early June, after gaining early Monday, as recent economic data raised speculation that the Federal Reserve might not be able to raise interest rates to the suspected degree the panel had thought.
Gold prices finished at their highest position of the month on Friday, as data regarding retail sales and inflation raised concerns about the pace of economic growth, and how it might not raise the rates again in 2017. Lower interest rates are supportive for gold, because they don’t offer a yield. Its settlement at $1227.50 an ounce on Friday was the highest finish since June 20th, and has climbed to as high as $1235 today.
Monday’s climb has lifted gold above “the technically important 200-day moving average at $1230 an ounce,” said Carsten Fritsch and the commodities team at Commerzbank. He also stated that if the stock were to rise consistently in this fashion that “we could see technical follow-up buying.”
“The longer rates stay near zero, the more crucial to market sentiment central banks become,” Adrian Ash, head of research at BullionVault stated. This means that “as policymakers flip-flop on daring to raise rates, more gold will swing.” And this not only affects gold, but also silver – because it has a smaller market size, attracting hot-money hedge funds that want to make fast moves for leverage.
On Monday, silver jumped 18.2 cents, or 1.1% after a 3.7% gain last week.
In other metals trading, copper hit a four month intraday high Monday, September copper HGU7 added 1.7%, or 4.5 cents, October platinum PLV7 climbed $9.20, or 1%, and September palladium PAU7 advanced $8.05, almost 1% to $864.80 an ounce.