Gold Comes Within Hair’s Breadth of $1,800, A First Since Feb.

Gold Comes Within Hair’s Breadth of $1,800, A First Since Feb.
Gold came within a hair’s breadth of touching $1,800 an ounce on Wednesday as longs in the yellow metal made their most serious attempt since February to return to a level key to recapturing last year’s price highs.

Benchmark gold futures on New York’s Comex scaled $1,798.25 before settling the session at $1,793.10, up $14.70 or 0.8%. It was Comex gold has gotten to since a $1,805 peak on Feb. 25.

The spot price of gold rose to as high as $1,797.24. Moves in spot gold are integral to fund managers, who sometimes rely more on it than futures for direction.

Gold wallowed at the start of the year in a selloff that took it to a 11-month low of $1,673.30 on Comex by early March.

But it seems to have caught an uptrend now, reinforced by renewed concerns over inflation and geopolitical risks. Both those elements had virtually deserted gold after its futures hit record highs of $2,089 per ounce in early August, and they remained absent until early this month as optimism about reopenings from Covid-19 lockdowns took hold instead.

“Gold’s next barrier is the $1,800 level; once prices capture that level, momentum traders could ride this wave towards the $1850 level,” said Ed Moya, head of U.S. research at online broker OANDA.

Wednesday’s run-up came despite fairly resilient U.S. bond yields and the dollar, which would typically be bearish for gold.

U.S. bond yields, measured by the 10-year Treasury note, hit a session high of 1.59%, versus Tuesday’s close of 1.56%. The 10-year note was at a 14-month high of 1.77% on March 30.

The Dollar Index, which pits the greenback against the euro and five other major currencies, was at 91.13, down 0.1% on the day.

Gold has returned to an upward trajectory as safe-haven flows return to the precious metal on concerns about new Covid flare-ups in major economies India and Japan and growing risks to the U.S. outlook, while Treasury yields appear anchored.

“Gold’s outlook is becoming very bullish as too many risks are percolating globally,” observed Moya. “The virus spread across Asia is weighing on sentiment.”

“Market positioning across equities and fixed income could lead to massive inflows for bullion. Even in the U.S., calls for caution are growing for U.S. equities as some analysts are eyeing a potential 10% pullback.”

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