Gold Price surges 2% on US dollar fall
Sydney-Australia (May 14) Gold prices have jumped two per cent, rising well above $US1,200 an ounce to a five-week high as US the dollar hit a three-month low after disappointing US retail sales data.
US retail sales were unchanged in April as households cut back on purchases of automobiles and other big-ticket items, suggesting the economy was struggling to make a strong rebound after barely growing in the first quarter.
Spot gold hit a five-week high of $US1,218.80 an ounce after the US data pushed prices through the 100-day and 200-day moving averages, attracting additional technical buying.
The US June futures contract settled up 2.2 per cent at $US1,218.20 an ounce.
The metal added to Tuesday's one per cent gains, when it benefited from the softer dollar and volatility in global bond markets.
"A close above technical resistance at $US1,215 could help gold exiting the narrow trading range between $US1,175 and $US1,225 the metal has been confined over the past ten weeks," ActivTrades chief analyst Carlo Alberto de Casa said.
"The US dollar's weakening has been instrumental to the latest move higher and of course the view that the Fed is less likely to raise interest rates next month after weak economic data."
The US dollar fell one per cent against a basket of leading currencies, after the data helped push back expectations of when the Federal Reserve will start raising interest rates.
Fed officials provided no clarity on Tuesday on when the US central bank would raise interest rates.
Interest rates at rock-bottom levels have benefited gold since the 2008-2009 financial crisis.
"The question facing gold is will bullion derive more upwards thrust from a weaker dollar or will rising yields sap and possibly reverse the rally?" HSBC said in a note.
Silver climbed 3.4 per cent to a five-week high of $US17.11 an ounce, while platinum rose one per cent to $US1,143.35 an ounce.
"There is a renewed risk of strike action at South Africa's platinum mines as companies are forced to restructure, leading to job cuts," Capital Economics said in a note.
Source: HeraldSun.au
