adminLONDON. – Gold prices climbed yesterday to their highest since August 2016 as a weakening dollar helped it to extend gains of more than 10 percent since mid-December. The dollar plunged to a three-year low against a basket of major currencies after the US treasury secretary said he welcomed a weaker greenback, making gold cheaper for users of other currencies.
The lower dollar could also drive prices higher in the United States and increase demand for gold as a hedge against inflation. “Gold is benefiting tremendously from the weaker dollar,” said ETF Securities analyst Nitesh Shah.
Spot gold was up 0,1 percent at $1 358,80 an ounce by 1042 GMT. It had earlier touched $1 366,07, the highest level since August 3, 2016. US gold futures were up 0,2 percent at $1 358,50 an ounce. Gold has broken above its 2017 high of $1 357,54, a key technical level, with further resistance around $1 370 and the 2016 high of $1 374,91.
Momentum indicators signalled that gold should rise further, ScotiaMocatta analysts said.
“Exchange-traded fund (ETF) holdings (of gold) continue to increase . . . we also see large open interest around the $1,350 strike level for the upcoming expiry, which should help to keep prices buoyant over the near term,” said MKS PAMP trader Sam Laughlin.
Holdings of gold in ETFs tracked by Reuters and bets by funds on higher gold prices on the Comex exchange have surged in recent weeks.
The market was looking ahead to a European Central Bank interest rate decision at 1245 GMT and a news conference by its chief, Mario Draghi, at 1330 GMT.
Draghi is expected to pour cold water on any view that the bank is speeding towards an interest rate increase. – Reuters.
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