Gold inched higher on Tuesday to mark a fourth-straight session climb, with a weaker U.S. dollar and concerns surrounding inflation and market valuations, lifting prices to their highest finish since January.
“Investors know that inflation is going to run hot, and it will remain above the Federal Reserve’s target of 2%,” said Naeem Aslam, chief market analyst at AvaTrade, in a note. “Higher inflation numbers are going to keep the shine in the gold price, and it is highly likely that we may see the gold price topping the $1,900 mark in the coming days.”
The Fed is unlikely to adjust its monetary policy to handle inflation as it “continues to believe that the surge in inflation is nothing but temporary,” and Aslam expects that to help support gold prices.
On Tuesday, however, gold prices spent some time trading lower, pressured by a rise in U.S. Treasury note yields, which hit a high above 1.66% in Tuesday trading, before settling with a modest gain.
On Monday, the precious metal closed above the long-term 200-day moving average for the first time since early 2021. Analysts view moves above or below moving averages as a gauge of an asset’s bullish and bearish momentum.
But whether the metal is able to sustain this breakout will depend on bond yields, said Fawad Razaqzada, market analyst at ThinkMarkets. If the bond-yield rise accelerates, “then the precious metal might struggle to extend its gains further.”
On Tuesday, June gold
inched up by 40 cents, or less than 0.1%, to settle at $1,868 an ounce — the highest most-active contract finish since Jan. 7, FactSet data show. On Monday, the precious metal surged 1.6% to also settle at the highest since early January.
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Meanwhile, July silver
added 6 cents, or 0.2%, to $28.33 an ounce, after climbing 3.3% Monday. Prices marked their highest settlement since February.
Among other metals traded on Comex, July copper
tacked on 0.3% to nearly $4.73 a pound.
In a report released Tuesday, Metals Focus estimated that while platinum remained in a surplus last year, 2020’s oversupply of 181,000 ounces was down by almost 80% from 2019’s oversupply figure. Metals Focus expects platinum to remain in a surplus this year of around 180,000 ounces.
Palladium, meanwhile, recorded a supply deficit for a ninth straight year, though the deficit of 169,000 ounces was “only a quarter” of the magnitude seen over the 2012-2019 period, the report said. This year, Metals Focus expects palladium’s deficit to top one million ounces for the first time in five years, driven by a 16% recovery in autocatalyst demand and “restrained” growth in supply.