Gold Prices Soar Unabated
Gold buyers catch a breather around the all-time high of $1,981.22.
The yellow metal keeps cheering US dollar weakness, mint wars and geopolitical tension add to upside momentum.
US fiscal package update, coronavirus news and American calendar should be watched for fresh impulse.
Gold rises 1.13% while picking up the bids near $1,964 during Tuesday’s Asian session. The bullion recently surged to the record top of $1,976.77 as the US dollar index remains heavy near the lowest since mid-2018. Also fueling the metal’s safe-haven demand could be news suggesting an increase in the geopolitical tension and mixed plays the US and Chinese mints. Even so, traders are waiting for the key clues concerning the American fiscal package while targeting the $2,000 threshold.
The party that never ends…
The precious metal buyers are unstoppable as US dollar weakness joins the geopolitical risks. The US dollar Index (DXY), the gauge of the greenback versus the major currencies, remains on the back foot around mid-March 2018 low, at 93.55 now. The greenback index seems to have been bearing the burden of rising coronavirus (COVID-19) cases in the US and uncertainty surrounding the much-awaited aid package. In the latest update, Republicans offer details of $1 trillion aid package while White House chief of staff Meadows said to have a very productive meeting' with the House Speaker Nancy Pelosi on the aid bill.Elsewhere, increase in the US aerial presence over the South China Sea and North Korean Leader Kim Jong-Un’s push for nuclear weapons, coupled with blasts in Iraq, back geopolitical fears and increase the safe-haven demand of the commodity. Furthermore, the US mint said that they have reduced the production of Gold and Silver coins whereas the People’s Bank of China (PBOC) showed readiness to increase the coin supply.
Amid all these catalysts, S&P 500 Futures gained 0.40% to 3,245 whereas the US 10-year Treasury yields rise 1.1 basis points (bps) to 0.62% by the press time.
Given the sustained US dollar weakness amid a surge in the safe-haven demand, the precious metal is expected to continue on its north-run towards $2,000 psychological level. However, traders should keep close eyes on the risk catalysts as wild moves can be expected in case of US dollar positive news.
The previous record high, flashed in September 2011 around $1,921 becomes the key support to watch. Alternatively, the 61.8% Fibonacci expansion of the quote’s run-up from mid-2001 to late-2011, around $2,077.