Gold set for best month since July 2020 on softer US dollar, inflation woes

BENGALURU (REUTERS) – Gold rose on Monday (May 31) and was heading for its best monthly jump since July 2020, boosted by a weaker US dollar and lower bond yields, while growing inflationary pressure lifted demand for the safe-haven metal as a hedge.

Spot gold was up 0.4 per cent at US$1,909.81 per ounce by 3.11am GMT (11.11am Singapore time), while US gold futures gained 0.4 per cent to US$1,913.

Bullion has risen nearly 8 per cent so far this month.

“Gold is pretty much drawing its strength from inflation fears and some inclination of the yields,” said Mr Stephen Innes, managing partner at SPI Asset Management.

“The dollar is staying weaker… Gold bulls now have their eyes set on US$2,000 and most of the guys are thinking it’s going to go quite higher,” he said.

The dollar index eased 0.1 per cent against its rivals, while the US 10-year Treasury yield fell to 1.593 per cent last Friday, reducing the opportunity cost of holding non-interest bearing gold.

Data last Friday showed that US consumer prices surged in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2 per cent target and posting its largest annual gain since 1992.

Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the United States and Britain.

Investors’ focus this week will be on US payrolls data due on Friday, with median forecasts at 650,000.

“On the technical front, a trade above the US$1,915.60 would, however, signal a resumption on the US$1,950 target… and there is strong support at the US$1,875 and US$1,850 levels,” Phillip Futures senior commodities manager Avtar Sandu said in a note.

Palladium rose 0.5 per cent to US$2,839.72 per ounce, while platinum climbed 0.9 per cent to US$1,187.50.

Silver jumped 0.7 per cent to US$28.07 and was heading for its best monthly gain since December.

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