Gold Rises as Dollar Weakens: Safe Haven Status Reaffirmed
Oil Prices Lack Risk Premium, But Gold Shines
Oil prices may not be benefiting from the latest turmoil in the Middle East, but gold is once again proving its status as a safe haven of choice. This is especially true after the recent decline of the US dollar.
Gold Futures Nearing $1,900 Level
The most-active gold contract on New York’s Comex, December, settled up $12, or 1%, at $1,887.30 per ounce. It came close to reaching the psychologically significant $1,900 level, being just $10 shy. The last time Comex gold traded in the $1,900s was on September 27.
Spot Gold on the Rise
Spot gold, which some traders closely monitor, reached $1,874.33, up $13.81, or 0.7%, for the day. Its session peak was $1,858.70.
Factors Driving Gold’s Rally
Gold prices rose as the US dollar weakened further from its 11-month highs and bond yields, benchmarked against the dollar, retreated from levels not seen since 2007.
Gold Attracts Inflows Amid Market Uncertainty
Ed Moya, an analyst at online trading platform OANDA, attributed gold’s price rally to falling global bond yields and uncertainty surrounding the Israel-Hamas conflict. Additionally, the Federal Reserve’s efforts to cool the economy have also contributed to the inflows into gold.
Positive Momentum for Gold
Moya highlighted that gold has recovered approximately 40% of its losses over the past month. He stated, “Bullish momentum might continue until the price reaches the $1,896 level. If Wall Street becomes convinced that interest rates have peaked and the chances of further tightening in 2024 are unlikely, gold could rally back above the $1,920 level.”
Gold has once again proven its role as a safe haven asset as it outperforms oil amidst the recent turmoil in the Middle East. The decline of the US dollar has further bolstered gold’s rally, bringing it closer to the psychologically-bullish $1,900 level. Spot gold, which many traders closely monitor, also experienced an upward surge. The weakening US dollar and declining bond yields have contributed to gold’s recent gains. Uncertainty surrounding the Israel-Hamas conflict and the Federal Reserve’s efforts to cool the economy have attracted inflows into gold. With positive momentum building, gold could potentially surpass the $1,920 level if interest rates stabilize and further tightening becomes less likely. Gold’s resilience and appeal as a safe haven asset continue to attract investors seeking stability in these uncertain times.
