Gold futures traded above a price that had been viewed as a point of resistance for bullion for weeks, and turned positive in the year to date, perhaps pointing to a near-term bullish outlook for the precious metal, according to traders.
June gold was $14.70, or 0.8%, higher at $1,912.70 an ounce, after a 0.7% gain on Tuesday, a move that extended a move for the most-active contract to the highest settlement since Jan. 7.
Weakness in the U.S. dollar particularly against China’s yuan which is at its highest in about three years, and a retreat in Treasury yields, with the 10-year Treasury note at around 1.56%, have buttressed gold moves.
Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding them against yield-bearing assets. And dollar weakness can make assets priced in the currency more attractive to overseas investors.
Commodity analysts have made the case that talk from a number of Federal Reserve officials, who have expressed tolerance in the short-term for rising inflation as the economy recovers from the COVID-19 pandemic, has helped to buoy bullion.
“Gold continues its fine form due to ongoing weakness in US dollar and bond yields—thanks mainly to a dovish Federal Reserve, still insistent on keeping emergency stimulus measures running at full throttle,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a daily note.
Gold is headed for a monthly gain of 8% and its recent rise has helped it flip into positive territory in 2021. Bullion’s current gains put it on track for its best monthly climb since July, FactSet data show.