Gold prices haven’t been this strong in more than a year
New York (Mar 3) Gold futures climbed past the key $1,250-an-ounce level on Thursday, resulting in its strongest settlement in more than a year. The U.S. Federal Reserve’s beige book released late Wednesday offered a more downbeat tone about economic activity through late February and economic reports Thursday showed weakness in the economy, lifting the precious metal’s investment appeal.
April gold GCJ6, +1.43% climbed $16.40, or 1.3%, to settle at $1,258.20 an ounce. The settlement was the highest since Feb. 5, 2015, according to data from Dow Jones. The precious metal is looking at a roughly 3% return for this week.
The yellow metal’s current level confirms a breakout to the upside, said Fawad Razaqzada, technical analyst at Forex.com and City Index.
“If the metal can sustain its gains” and move above February 2015’s high of roughly $1,263, then the “bulls may aim for [the] January 2015 high at $1,307 next,” he said. Above that level, “there is not much obvious resistance until the 200-week moving average, currently at $1,339.”
Wednesday’s beige book report offered a relatively somber take on the U.S. economy, raising expectations that the central bank will be slow to lift interest rates further this year.
Data Thursday appeared to back up that outlook, with jobless claims up in the past week of February. Reports showing that the U.S. service sector grew more slowly in February and January factory orders climbed less than expected helped give gold an added boost.
The market now looks to Friday’s monthly U.S. jobs report for directional cues.
Unless the U.S. nonfarm payrolls imply “an interest-rate hike before June, gold prices will stay firm,” said Chintan Karnani, chief market analyst at Insignia Consultants. “However, unless gold breaks and trades over $1,276, I am advising clients to be cautious going long in gold.”
MarketWatch’s Tomi Kilgore said gold prices produced a rare bullish “golden cross” technical pattern this week, but the move might be flashing more of a yellow light than green for gold bulls. Read: Gold’s ‘golden cross’ is not a golden ticket for bulls
A sharp, steady climb in gold has also been underpinned by the view that global markets are still unstable and that economies in Europe may embark on economic policies that take benchmark interest rates deeper into negative territory. The unconventional policies are beneficial to gold, which has risen during a period in which investors fear having to pay to park their money, which results from negative rates.
Dollar-denominated metals also saw support from a weaker dollar Thursday, with the U.S. ICE Dollar Index DXY, -0.57% down about 0.7%. A weaker dollar makes assets priced in the currency more attractive to buyers in other monetary units.
Among other metals, May silver SIK6, +0.92% gained 12.4 cents, or 0.8%, to $15.146 an ounce.
Source: MarketWatch
