Gold steadies off multi-month peak on weaker dollar, bitcoin selloff
“The recent slide in cryptocurrencies also boosted the appeal of gold as an alternative investment asset. Gold’s upward momentum is very strong and it is likely to challenge a key psychological level at $1,900 in the days to come,” said Margaret Yang, a strategist at DailyFX
LONDON-Gold steadied on Monday, consolidating near a 4-1/2-month peak, buoyed by a subdued dollar and a selloff in cryptocurrencies, while investors awaited key economic data releases this week.
Spot gold was little changed at $1,881.40 per ounce by 1021 GMT. Last week, gold prices hit their highest level since Jan. 8 at $1,889.75. U.S. gold futures rose 0.3% to $1,882.10.
Following volatility last week in the wake of China’s clamp down on commodity prices and U.S. Federal Reserve meeting minutes, gold has moved above its 200-day moving average, supported by a weaker dollar and bond yields and questions about inflation, said independent analyst Robin Bhar. Gold is considered a hedge against inflation.
Also supporting gold, Bitcoin fell 13% on Sunday, leaving it around 50% below this year’s high after Beijing stepped up efforts to crack down on bitcoin mining and trading.
“The recent slide in cryptocurrencies also boosted the appeal of gold as an alternative investment asset. Gold’s upward momentum is very strong and it is likely to challenge a key psychological level at $1,900 in the days to come,” said Margaret Yang, a strategist at DailyFX.
Meanwhile, the dollar index was pinned near three-month lows, making gold more attractive for those holding other currencies.
Rising U.S. inflationary risks have spooked markets, and minutes from the Fed’s most recent meeting suggested some policymakers were ready to talk about reducing stimulus by tapering bond purchases.
Markets will be keen to hear if the crowd of Fed speakers this week will stick to the script on being patient with policy.
A slew of economic data including GDP, jobless claims and durable goods are also scheduled for release.
Gold’s move into ‘overbought’ technical territory, given seven straight days of gains, could signal a correction, said StoneX analyst Rhona O’Connell.
Elsewhere, palladium rose 0.2% to $2,787.62 per ounce, silver gained 0.6% to $27.68, and platinum was little changed at $1,166.96.
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