With the beginning of May’s trading, gold futures rose, supported by the weak Treasury market and the weakening of the US dollar. With the persistence of inflation concerns in all global financial markets, could these fears spur another rise in the price of gold? Gold has been abandoned since the coronavirus vaccines were announced late last year, leading to widespread confidence and risk tolerance across all global stock markets. Could the price of gold surpass the major peak of $1800 this week?
The price of gold rose to the level of $1798 at the beginning of trading this week, before settling around the level of $1787 as of this writing. Gold prices are retreating from a tepid weekly loss of 0.4%. Since the beginning of the year 2021 to date, the price of gold has decreased by approximately 6%. Silver, the sister commodity to gold, also appreciated at the beginning of this month's trading. As silver futures rose to $26.74. The white metal held steady during the time gold was down, up more than 7% over the past month. So far this year, silver prices have increased by approximately 1%. Over the past twelve months, the metal commodity has risen nearly 80%.
The metals market is mainly benefiting from the weak dollar and declining bond yields.
The US Dollar Index (DXY), which measures the dollar's value against a basket of six major rival currencies, fell to 90.99, from an opening at 91.28. A lower dollar is a good thing for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase them. The US Treasury bonds also failed to maintain the momentum heading towards May, with the benchmark 10-year yield dropping 0.039% to 1.592%. The one-year yields were unchanged at 0.53%, while the 30-year note declined 0.035% to 2.265%. Lower returns are positive for metals because they reduce the opportunity cost of holding non-yielding bullion.
Accordingly, industry observers say that there is another factor in the rise in metals prices, which is that investors are looking for deals after last week's decline. Accordingly, Jim Wyckoff, Kitco.com chief analyst, wrote in a daily research note, “The bulls on gold and silver rallies have regained the slight technical advantage in the near term. Gold and silver prices rose strongly in early trading in the US on Monday, due to some searches for perceived deals and amid bullish external market forces that include the weakness of the US Dollar Index.”
Relative to other metal markets, copper futures rose to $4.507 per pound. Platinum futures rose to $1243.00 an ounce. Palladium futures rose to $,994.50 an ounce.
Technical analysis of gold:
The bullish momentum of the gold price increased, and it may continue to do so if the recent gains of the US dollar stop. Global concern about India and its spread of the virus to the rest of the world may increase investors' appetite for safe havens, among which gold is among the most important. Breaking through the psychological resistance of $1800 will increase the buying process to push prices to the resistance levels of $1818, $1829 and $1845. At the same time, hopes for a rally will evaporate if the gold price moves to the support level of $1748. I still prefer to buy gold from every downside.
