Gold futures jumped to to the highest point since early March amid a host of factors including a multi-month low in the dollar, continued loose monetary policies and a general unease in the marketplace.
Gold for June delivery on the Comex division of the New York Mercantile Exchange climbed $12.50 or one percent to $1,278.90 per ounce. Earlier, the contract touched $1,283.0 per ounce, the highest since March 10.
“A confluence of monetary and financial factors is supporting gold prices,” HSBC analyst James Steel said. “The US dollar is on the defensive and commodities are making a comeback. At the same time risk-off sentiment seems to be on the rise. These factors are individually good for gold, but when combined they are a powerful bullish cocktail.”
The precious metal has now gained for five straight sessions, but recent decisions by central bankers has been a primary catalyst for the recent surge.
On Wednesday, the US Federal Reserve maintained its historically low nominal interest rates and didn’t signal to markets that another rate hike was imminent.
Elsewhere in monetary news, the Bank of Japan’s (BOJ) shocked markets Wednesday by deciding to keep its monetary policy unchanged. The lack of additional stimulus measures lead to a sell-off in the Nikkei, which closed down 3.61 percent, and a violent spike by the yen.
“We saw heightened volatility in the markets on Thursday, one day after the Fed’s policy statement came out, but the Fed’s deliberations had little to do with the market fluctuations,” Edward Meir, analyst at INTL FCStone, said. “Instead, it was the Bank of Japan that stirred things up earlier in the day after it said that it would leave monetary policy unchanged, blindsiding investors who had been expecting further easing.”
Paper holdings of gold ETF’s tracked by FastMarkets saw inflows of 2.61 tonnes yesterday. Holdings now stand at 1,810 tonnes, up 1.31 tonnes since the start of the week after investors sold 2.8 tonnes on Monday.
“In contrast to our expectations, risk-off sentiment has resumed, largely because of the BoJ and to a lesser extent the Fed,” Boris Mikanikrezai, metals analyst at FastMarkets, said. “Accordingly, safe-demand has picked up, exerting upward pressure on gold.”
Turning to international markets, Germany’s DAX and France’s CAC-40 were down 1.4 percent and 1.7 percent respectively, while the dollar was trading 0.7 percent softer at $1.1422 against the euro.
In today’s data, US Core PCE price index month-over-month in March was in-line with forecasts at 0.1 percent. Additionally, employment cost index quarter-over-quarter in the first quarter also met expectations at a 0.6 percent uptick.
Personal spending month-over-month in March came in at 0.1 percent, below the estimate of 0.2 percent, while personal income over the same period hit 0.4 percent, above the economic consensus of 0.3 percent.
Later, University of Michigan consumer sentiment and inflation expectations are slated for release later.
As for other precious metals, Comex silver for May deliver jumped 22.7 cents or 1.3 percent to $17.780 per ounce – the highest point since January 28.
Platinum for July settlement gained $17.10 or 1.6 percent to $1,067.80 per ounce, while the most-actively traded palladium contract stood at $627.90, up $3.55 or 0.6 percent.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
