Gold hovers near 4-1/2-month high on tepid dollar, inflation jitters

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Gold prices climbed on Monday to hover

near a 4-1/2-month high, supported by a weaker U.S. dollar and

growing inflationary pressure, while a slide in cryptocurrencies

further lifted the safe-haven metal’s appeal.

Spot gold was up 0.2% at $1,883.21 per ounce by 0301

GMT. Last week, gold prices hit their highest level since Jan. 8

at $1,889.75.

U.S. gold futures rose 0.4% to $1,884.30 per ounce.

“The U.S. dollar index remain relatively weak and the

manufacturing and service PMI’s from the U.S. and Europe

actually raised the prospect of inflation in months to come,”

Margaret Yang, a strategist at DailyFX said.

“Recent slide in cryptocurrencies also boosted the appeal of

gold as an alternative investment asset. Gold’s upward momentum

is very strong and it is likely to challenge a key psychological

level at $1,900 in the days to come.”

The dollar stood near its lowest levels in three months

against the resurgent euro and other European currencies, making

gold cheaper for other currency holders.

Rising U.S. inflationary risks have spooked markets after

data showed rise in consumer prices and pick up in factory

activity, lifting gold’s appeal as an inflation hedge.

Indicative of sentiment, holdings of SPDR Gold Trust ,

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the world’s largest gold-backed exchange-traded fund, rose 0.6%

to 1042.92 tonnes on Friday. Speculators raised their net long

positions in COMEX gold in the week ended May 18.

Further contributing to gold’s move, bitcoin fell

13% on Sunday, sending it down ~50% from the year’s high after

Beijing stepped up its efforts to crack down on bitcoin mining

and trading.

The White House said on Friday it had pared down its

infrastructure bill to $1.7 trillion from $2.25 trillion, but

Republicans dismissed the changes as insufficient for a deal.

Elsewhere, palladium jumped 1% to $2,810.32 per

ounce, silver gained 0.4% to $27.64 and platinum

climbed 0.6% to $1,173.03.

(Reporting by Brijesh Patel in Bengaluru, Editing by Sherry


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