Gold prices were higher on Monday as the sentiment on the US dollar declined. The drop was mostly due to a fall in bond yields. Another factor was the rise of caution as traders looked to the testimony that new Federal Reserve head Jerome Powell will give this week.
Comex gold futures for April were up at $1,342.20 per troy ounce. It rose 0.9 percent or $11.90, which is its highest since February 20.
Just last week, Gold was lower by 1.9 percent while silver fell 1.3 percent. Gold’s weekly drop was the biggest recorded since the week ending December 8 last year.
“There has been a strong start to the week from the gold bulls and with the market retaining its positive medium term outlook, there seems to be a wave of buyers looking to use this recent correction as a chance to re-enter the market again,” noted analyst Richard Perry
Gold has been known to be sensitive to movements in the dollar. A weaker dollar means that holders of foreign currency will be able to avail of gold at a cheaper price.
Meanwhile, Comex silver futures for March rose by 1.3 percent or 21 cents to $16.69 per troy ounce.
March copper was up 0.5 percent or 2 cents to $3.23 per pound.
April platinum climbed $10.60 or 1.1 percent ti $1,009.50 an ounce. March palladium on the other hand surged 1.3 percent or $13.20 and was at $1,054.35 an ounce.
Dollar Gradually Weakens with Looming Fed Testimony
The greenback grew stronger following the minutes of the Fed’s January policy meeting last week. According to those minutes, central bank officials justify the continued gradual interest rate hikes with the increased economic growth and rising inflation.
But traders became more cautious as Powell was set to testify on Tuesday before the US House of Representative’s Financial Services Committee. He will be testifying on the central bank’s semi-annual report on monetary policy and the economy.
Another reason for the drop was the continuous fall of the US 10-year Treasury yield. The bond yields continued to drop from last week’s four-year high of 2.957 percent.
The US dollar index, which is used to measure the greenback’s strength against a trade-weighted basket of six other major currencies fell 0.22 percent. It was at 89.61, lower from last Thursday’s a week and a half high of 90.17.
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