The end of the last working week was the most successful for gold since the end of 2020. Last Friday, the classic asset ended trading with an increase of 2%. Such a significant one-day increase helped to significantly improve the monthly statistics. Since mid-March, the main precious metal has already risen by 4% and has a great chance to maintain an upward trend amid a geopolitical tension between the United States and another world leader.
In addition, the pricing of gold is still influenced by the market situation. Last week, the asset was significantly supported by the weakening of the dollar and the decline in the yield of 10-year US government bonds. Due to this, gold was able to overcome the threshold of $1,780 for the first time in almost 2 months.
-The dollar began to weaken on the back of lower treasury bond yields. It fell below the psychologically important 1.60% mark, which in turn allowed gold to break out of the narrow price range and break above the 50-day moving average for the first time since the beginning of February.- said FXTM Market analyst Han Tan.
On Tuesday morning, the yellow precious metal continues to strengthen again on the decline in the attractiveness of the US currency. Against the backdrop of a weakening dollar, gold is trying to regain some of the positions lost yesterday. On Monday, June futures for precious metals fell by 0.5%, or $9.6. Thus, the asset ended trading on the New York stock exchange COMEX with a decline to $1,770.6.
At the time of preparation of this article, an ounce of gold is worth $1,771.85. The difference from the previous close is 0.07%. Meanwhile, May silver futures are also gaining 0.48%, and are trading at $25,962.
Commodity analysts believe that the upward movement of the quotes is also provoked by the uncertainty around the situation with the coronavirus. Supporting factors for gold, which is traditionally considered a safe asset, at the moment are the rapid increase in the incidence of COVID-19 in Japan and India, as well as problems in the implementation of vaccination in a number of countries.
For example, the precious metals market is now waiting for the decision that the US authorities will make regarding the Johnson & Johnson vaccine. Recall that last week, the US health authorities recommended to suspend the use of the drug, fearing the occurrence of blood clots in patients.
TD Securities analyst Bart Melek stated in an interview with Kitco News that countries that do not have a reliable vaccine deployment plan can have a very negative impact on the global economic recovery, which will also play in favor of gold.
The expert is optimistic about the further pricing of the yellow precious metal, drawing attention to the fact that gold has already passed the 50-day moving average, aiming for the next level.
Charles Nedoss, market strategist at LaSalle Futures Group, agrees with his colleague. According to the expert, there are no significant obstacles for gold to overcome the next significant mark of $1,800 at this stage:
- $1,809.40 is a 100-day moving average, and we will reach it in time.
According to analysts, in the short term, gold may be on the verge of another rally, if it is able to overcome the key resistance levels. This opinion is shared, for example, by the commodity broker RJO Futures Daniel Pavilonis:
– If gold can close above $1,815 at the end of this week, it has a good chance to return to its historical highs and enter the age-old bull market.
It is important to note that this week the mood on the precious metals market will be determined by fairly calm macroeconomic indicators. For example, the decisions on interest rates to be announced by the European Central Bank and the Bank of Canada, as well as the release of the latest data on applications for unemployment benefits in the United States.