Gold price moves up as dollar decline continues

San Francisco (Mar 23)  The gold price hit a fresh two-week high on Monday afternoon after the dollar retreated further from last week’s highs following forecast-missing US home sales data.

Spot gold was last at $1,185.70/1,186.50 per ounce, up $3.60 on the pre-weekend close. It hit its highest since March 6 earlier in the session at $1,189.30. Silver was last 17 cents higher at $16.85/16.90 per ounce, platinum was up $10 at $1,144/1,149 and palladium edged $1 higher to $772/778.

The dollar’s retreat to 1.0930 against the euro provided the impetus – the US currency had been softening before home sales data fell short of the annual rate of five million units for the second consecutive month, pushing the greenback to an intraday low of 1.0945.

Total existing home sales at 4.88 million were short of the forecast 4.91 million, albeit up from the previous month’s 4.82 million. New home sales data is due on Tuesday alongside manufacturing data – these will be closed watched for any signs of improvement that may reignite speculation for higher interest rates from June.

For now, following dovish comments last week from Fed chair Janet Yellen regarding the pace at which the US economy is growing, the general consensus among analysts is rates will be kept at near-zero levels until at least September.

“The FOMC’s change in stance has shifted the market consensus for a rate rise from June towards September, reducing dollar strength. The US currency, after getting ahead of its fundamentals in anticipation of a potential June increase, may now see a correction should US data continue to disappoint, providing further upside to metals prices,” FastMarkets’ Tom Moore said.

In other data today, eurozone consumer confidence at -4 was better than expected. Manufacturing and services PMIs are also due from most of the world’s major economies including China, France, Germany and the US on Tuesday.
 

Source: TheBullionDesk