Speculative buying and geopolitical tension maintain gold rally
Metal extends record rally as tension in the Middle East overshadows strong US job growth in March.
08 April 2024 - 08:37
bySherin Elizabeth Varghese
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Bengaluru — Gold prices extended their record rally on Monday, supported by speculative buying and continued tension in the Middle East, which overshadowed strong US job growth in March.
Spot gold was up 0.6% at $2,343.89/oz as of 4.06am GMT, after hitting a record high of $2,353.79 earlier in the session. US gold futures gained 0.7% to $2,361.09.
“If you look at futures pricing, we’re seeing indications now that there’s a bit of momentum chasing in the market ... to an extent we’re seeing a little bit of excessive optimism about the outlook for gold at the current level,” said Kyle Rodda, a financial market analyst at Capital.com.
Geopolitical tension in the Middle East could be another driving force for gold, Rodda said.
Strong central bank buying, safe-haven inflows amid elevated geopolitical risks, and demand from momentum-following funds have fuelled bullion’s 12% gain so far in 2024.
US job growth blew past expectations in March, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated Federal Reserve interest rate cuts in 2024.
Lower interest rates reduce the opportunity cost of holding bullion.
“The market looks like it wants to test $2,400, and with no evidence of a top forming — it just might make it,” said City Index senior analyst Matt Simpson.
“But at some point I expect to see some bearish volatility shake out some bulls from these highs, as the higher it goes the more tempting it becomes for some larger pockets to book a profit.”
Meanwhile, on the physical side, gold demand in India remained tepid last week as a blistering rally in domestic prices put off buyers, while premiums held firm in top consumer China.
Spot silver was up 1.4% to $27.85/oz, platinum edged 0.1% higher at $928.11 and palladium gained 0.4% at $1,006.88.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Speculative buying and geopolitical tension maintain gold rally
Metal extends record rally as tension in the Middle East overshadows strong US job growth in March.
Bengaluru — Gold prices extended their record rally on Monday, supported by speculative buying and continued tension in the Middle East, which overshadowed strong US job growth in March.
Spot gold was up 0.6% at $2,343.89/oz as of 4.06am GMT, after hitting a record high of $2,353.79 earlier in the session. US gold futures gained 0.7% to $2,361.09.
“If you look at futures pricing, we’re seeing indications now that there’s a bit of momentum chasing in the market ... to an extent we’re seeing a little bit of excessive optimism about the outlook for gold at the current level,” said Kyle Rodda, a financial market analyst at Capital.com.
Geopolitical tension in the Middle East could be another driving force for gold, Rodda said.
Strong central bank buying, safe-haven inflows amid elevated geopolitical risks, and demand from momentum-following funds have fuelled bullion’s 12% gain so far in 2024.
US job growth blew past expectations in March, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated Federal Reserve interest rate cuts in 2024.
Lower interest rates reduce the opportunity cost of holding bullion.
“The market looks like it wants to test $2,400, and with no evidence of a top forming — it just might make it,” said City Index senior analyst Matt Simpson.
“But at some point I expect to see some bearish volatility shake out some bulls from these highs, as the higher it goes the more tempting it becomes for some larger pockets to book a profit.”
Meanwhile, on the physical side, gold demand in India remained tepid last week as a blistering rally in domestic prices put off buyers, while premiums held firm in top consumer China.
Spot silver was up 1.4% to $27.85/oz, platinum edged 0.1% higher at $928.11 and palladium gained 0.4% at $1,006.88.
Reuters
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