Gold price heads for 15-month high as dollar gets crushed
London (Apr 29) Gold futures rallied on Friday and headed for their highest closing level since January 2015, as a continued slump in the greenback lured investors into dollar-denominated commodities.
June gold GCM6, +0.86% jumped $12.30, or 1%, to $1,278.70 an ounce, marking a fifth straight day of gains, according to FactSet data. That would be the longest winning-streak since early February.
The SPDR Gold Trust GLD, +0.56% was rising 0.6% in premarket trade, while the Market Vectors Gold Miners ETF GDX, +4.46% climbed 1.5%.
The big strengthening in the yen in the wake of the Bank of Japan meeting has hit the dollar, and the dollar has been punished across the board. That has played into the commodity space,” said Richard Perry, analyst at Hantec Markets.
The Japanese central bank on Thursday sent shock-waves through financial markets globally after it unexpectedly kept monetary policy on hold. Many investors had expected the BOJ to announce further easing measures to boost the country’s flagging inflation level.
The yen USDJPY, -0.86% surged against the dollar after the meeting and continued its march higher on Friday to high an 18-month high. The greenback was changing hands at ¥107.07, down from its Thursday close of ¥108.08.
The dollar weakness helped propel silver SIK6, +1.07% higher, setting the metal on track for its strongest settlement price since January 2015. The May contract traded 1.2% higher at $17.77 an ounce on Friday.
Precious metals have been among best performing assets in 2016, partly due to safe haven flows amid global economic uncertainty and partly because of a depreciation in the dollar. The main question for metals investors now is whether this rally has legs, or if a correction is on the horizon.
Several gold investors who have enjoyed the ride so far believe the next move is up from here — possibly even taking out prior highs, writes Michael Brush at MarketWatch.
Perry from Hantec Markets cautioned, however, that the recent rally could come to an end if the dollar finds a bottom and starts to appreciate again.
“I’m not a big advocate of gold pushing strongly higher. I think it will struggle to gain too much further, because I don’t think the dollar will drastically weaken from here,” he said.
Read: Why platinum is overtaking gold this year
In other metals, palladium for June PAM6, +0.62% rose 0.4% to $626.85 and ounce on Friday, while platinum for July PLN6, +1.37% climbed 1.3% to $1,063.80 an ounce.
Copper for July HGN6, +2.02% jumped 2.2% to $2.28 a pound.
Source: Reuters
