The yellow metal was trading at $1,354.65 an ounce as of 10:20 GMT on Thursday, after enjoying its best trading day on Wednesday since June 24, 2016.
“Higher US inflation combined with the US dollar exhibiting zero correlation to higher interest rates amidst burdening duel deficits (trade and budget) should play out favorably for gold markets,” the head of trading APAC at foreign exchange OANDA, Stephen Innes, told Reuters.
The US dollar hit a 15-month low on Thursday, trading at 106.30 yen. The dollar index, a measure of the greenback against a basket of six major currencies, fell 0.5 percent to 88.66.
“I think we could see significant US dollar weakness through the first half of the year,” Bill Baruch, president of Blue Line Futures, told the Street. “The real move in gold is yet to come. I think we could see prices above $1,400 an ounce later this year.”
Analysts say concerns over Washington’s possible pursuit of a weak-dollar strategy and the growing US fiscal deficit weighed on the greenback. Inflation fears boosted gold, which is considered as a safe haven against inflation.
According to Fawad Razaqzada, technical analyst at City Index, gold prices have managed to hold on to crucial retracement levels despite the recent pullback. “That tells me that the buyers are in control of this market and prices are going higher,” he said.
Looking at the long-term picture, Razaqzada said gold has risen higher for three consecutive years with prices last month hitting a 1.5-year high.
For more stories on economy finance visit RT’s business section
Article source: https://www.rt.com/business/418881-weak-dollar-boosts-gold/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Speak Your Mind
You must be logged in to post a comment.