Gold futures are rallying to kick off May, supported by a subdued Treasury market and a falling US dollar. With inflation fears fully intact across the global financial market, could these concerns jumpstart another rally in the yellow metal? Gold has fallen from grace ever since the coronavirus vaccines were announced late last year, igniting widespread confidence and risk tolerance throughout the equities arena. Can gold top the key threshold of $1,800 this week?
June gold futures surged $25.20, or 1.43%, to $1,792.60 per ounce at 14:08 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are coming off a tepid weekly loss of about 0.4%. Year-to-date, the precious metal is down roughly 6%.
Silver, the sister commodity to gold, is also soaring to start the trading week and month. July silver futures climbed $0.862, or 3.33%, to $26.74 an ounce. The white metal has been holding steady during the time that gold fell, up more than 7% over the last month. So far this year, silver prices are up nearly 1%. Over the last 12 months, the metal commodity has spiked about 80%.
The metals market is benefiting primarily from a weaker greenback and slumping bond yields.
The US Dollar Index (DXY), which tracks the buck against a basket of currencies, fell 0.32% to 90.99, from an opening of 91.28. A lower greenback is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
US Treasurys failed to maintain the momentum heading into May, with the benchmark 10-year yield down 0.039% to 1.592%. The one-year bill was unchanged at 0.53%, while the 30-year bond tumbled 0.035% to 2.265%. Lower yields are positive for metals since it reduces the opportunity cost for holding non-yielding bullion.
Industry observers say that another factor for the pop in metal prices is investors seeking bargains following last week’s drop. Jim Wyckoff, a senior analyst at Kitco.com, wrote in a daily research note:
“The gold and silver bulls have regained the slight near-term technical advantage. Gold and silver prices are solidly up in early U.S. trading Monday, on some perceived bargain hunting and amid bullish outside market forces that include a weaker U.S. dollar index.”
In other metal markets, June copper futures advanced $0.039, or 0.87%, to $4.507 a pound. June platinum futures rallied $37.80, or 3.14%, to $1,243.00 per ounce. July palladium futures increased $41.30, or 1.4%, to $2,994.50 an ounce.