Gold Price rallies to 15-month high, up over 4% in April
New York (Apr 30) Gold and silver futures rallied Friday, posting the highest settlements since January 2015, as a slump in the greenback to its lowest level in about 11 months lured investors into dollar-denominated commodities.
June gold GCM6, +2.25% jumped $24.10, or 1.9%, to settle at $1,290.50 an ounce, marking a fifth straight day of gains. The settlement was the best since late Jan. 2015.
Prices ended roughly 4.4% higher for the month, based on the most-active contracts, and were up over 5% on the week.
July silver SIN6, +1.72% climbed 23.1 cents, or 1.3%, to end at $17.819 an ounce, also marking the highest futures settlement in about 15 months. For the month, prices finished 15.2% higher, based on the most-active contracts, according to FactSet.
The SPDR Gold Trust GLD, +1.95% was up 1.8% Friday, while the Market Vectors Gold Miners ETF GDX, +6.39% jumped 5.2%.
“Gold has a nice tailwind at the moment with the dollar weak and equity markets teetering to the downside,” said Michael Armbruster, principal and co-founder at Altavest.
A close above $1,280 in the June gold futures contract marks “a clear breakout from its recent consolidation,” he said. “Negative real interest rates everywhere is the best argument for higher gold prices. I wouldn’t be surprised to see gold near $1,400 in the next month.”
The Bank of Japan on Thursday sent shock-waves through financial markets globally after it unexpectedly kept monetary policy on hold. Many investors had expected the central bank to announce further easing measures in an attempt to boost inflation.
“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 yen USDJPY, -1.48% surged against the dollar after the meeting and continued its march higher on Friday to high an 18-month high. The ICE U.S. Dollar Index DXY, -0.80% a measure of the buck’s strength against a basket of six rival currencies, tapped its lowest levels in about 11 months.
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. Read:Gold has everything in its favor
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.
In other metals, platinum for July PLN6, +2.77% climbed $27.70, or 2.6% to $1,078.40 an ounce, trading more than 10% higher for the month. Palladium for June PAM6, -0.20% rose $3.30, or 0.5%, to $627.65 and ounce, up over 11% for the month.
Copper for July HGN6, +2.26% added 5.2 cents, or 2.3%, to $2.284 a pound, trading more than 4% higher for the month.
Source: MarketWatch
