Gold futures surged to a 15-month high on Monday amid a combination of light holiday liquidity and a weaker dollar.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last up $11.70, or 0.9 percent, at $1,302.20 per ounce. Trade has ranged from $1,292.50 to $1,304.40.
“We are quite convinced at this point is that the bear market that had so plagued gold priced in US dollars since November of 2011 has rather obviously ended, even as the bull market in gold priced in yen has been extant for nearly three years and as gold prices in euros has been extant for a year or more,” Dennis Gartman, editor of the Gartman Letter, said.
Trade volumes should be thin today because it is the Golden Week holiday in Asia, while much of Europe is closed for May Day. But oftentimes, light activity results in outsized price movements.
Several variables have been behind gold’s dramatic advance and most dovetailed over the course of the past week, INTL FCStone’s Edward Meir said.
“The Fed declined to give any indication as to when it was planning to raise rates, thus opening the way to further dollar selling. In addition, the dollar got whacked against the yen after the BoJ surprised the markets by standing pat on further easing,” said Meir, who sees gold trading in a range of $1,230-$1,375 for May.
The euro was last 0.30 percent stronger at 1.1483 against the dollar, while the yen hit an 18-month high at 106.16.
“The ratcheting down of expectations of Fed rate rises since the end of last year and the turn in the dollar’s fortunes are the mainsprings of gold’s rally. Added to this is an increase in investor risk aversion and enhanced geopolitical concerns,” HSBC analyst James Steel said.
“Repeated gains have brought in momentum trading and the gold market is attracting a wider audience. This argues for higher gold prices, in our view, and so far the gold market has delivered,” he added.
Nevertheless, the yellow metal may run into near term is profit taking as the momentum and technical trading that has boosted gold can be short term and may be quick to change.
“But this gold rally looks firm and we believe it would take a combination of all three factors – a dollar rally, heavy profit taking and a shift in risk perception – to drag prices lower. Until that happens or weak physical demand catches up to the market, we believe gold could trade higher,” Steel said.
As for the other precious metals, Comex silver for July delivery was last up 18.6 cents, or 1.04 percent, at $18.05 per ounce. Trade has range from $17.75 to $18.06, which is a 16-month high.
Platinum for July delivery on the Nymex was up $7.10 at $1,085.50 per ounce, while the most-actively traded palladium contract was at $627.90 per ounce, up 25 cents.
The post Gold breaks $1,300/oz; traders say bear market has ended appeared first on The Bullion Desk.
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Source: Bullion Desk News
