Gold Surpasses $1,700 as US Data Drives Sentiment Shift

Earlier last week, gold continued its rally surpassing its $1,700 an ounce price. This comes as weak data drives a shift in sentiment in the precious metals market. The price of spot gold gained a little over 1% to reach $1,719.04 an ounce. This is its highest price in three weeks.

Meanwhile, benchmark 10-year treasury yields in the United States declined to a new low as the dollar extended its decline, which in turn, made gold cheaper for other currency holders.

Experts believe that bullion is coming nearer to its 50-day moving average after its surge last Monday when a U.S. manufacturing gauge plunged more than expected. Since April, the price has been trading below the technical market, which is a sign of poor sentiment, which saw the metal decline into a bear market.

Currently, the safe-haven metal is at a critical juncture as traders wait for nonfarm payrolls for more insights on the path the central bank will take on monetary policy in the future. Experts argue that a weaker-than-expected print may cause a further decline in rate hike expectations, which will in turn strengthen bullion at a technical turning point.

In a Bloomberg note, ABN Ambro Bank NV analyst Georgette Boele stated that gold had surpassed the $1,700 per ounce mark again, which meant that the break below $1,650–$1,700 per ounce was a false break.

Other U.S. employment data, which includes figures from the ADP Research Institute and job openings, will also be crucial this week. In an interview with Reuters, RJO Futures market strategist Bob Haberkorn stated that if data released on the jobs came out much weaker than expected, gold would rally.

Haberkorn added that if it came out much stronger than expected, the market could interpret that as well, which meant that the Federal Reserve could keep going higher with rates.

Thus far, the Fed has struggled with weakening the labor market using a tighter central bank policy in an effort to fight inflation. Tighter policy affects gold negatively by pushing up bond yields, which in turn reduces the attractiveness of the nonyielding asset.

Expectations for even more aggressive hike in rates in the United States and safe haven flows have also driven a dollar rally, which is negatively correlated with this particular precious metal. In her note, Boele added that investors weren’t as interested in the dollar as a safe haven, noting that risk aversion had also eased.

Precious metals companies such as Hecla Mining Company (NYSE: HL) will be watching the market movements closely to see in which directions the coming weeks and months are likely to go in terms of commodity prices.

About MiningNewsWire 

MiningNewsWire (MNW) is a specialized communications platform focused on developments and opportunities in the global resources sector. The company provides (1) access to a network of wire services via NetworkWire to reach all target markets, industries and demographics in the most effective manner possible, (2) article and editorial syndication to 5,000+ news outlets (3), enhanced press release services to ensure maximum impact, (4) social media distribution via the Investor Brand Network (IBN) to millions of social media followers, and (5) a full array of corporate communications solutions. As a multifaceted organization with an extensive team of contributing journalists and writers, MNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. By cutting through the overload of information in today’s market, MNW brings its clients unparalleled visibility, recognition and brand awareness. MNW is where news, content and information converge.

To receive SMS text alerts from MiningNewsWire, text “BigHole” to 888-902-4192 (U.S. Mobile Phones Only)

For more information, please visit https://www.miningnewswire.com

Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.miningnewswire.com/Disclaimer

MiningNewsWire
Los Angeles, California
www.miningnewswire.com
310.299.1717 Office
Editor@MiningNewsWire.com

MiningNewsWire is part of the InvestorBrandNetwork.