Gold Rises to Highest Level in Four Months

Gold trades near its highest level in four months and a bullish trend is likely. 

For three weeks in a row, continuing investor concerns capped gains for this precious metal. These were about runaway inflation and ongoing coronavirus outbreaks in some countries. 

Lockdowns in India have limited the physical gold market. It was prompted by India’s biggest wave of COVID-19 so far. There was also a jump in the country’s domestic prices.

In Asia, Gold rose on Monday morning trading near its highest level in four months. Hints of a bullish trend started to emerge.

By 12:04 AM ET (4:04 AM GMT), Gold futures edged up 0.39% to $1,884.05 after their highest level since Jan. 8. They climbed up to $1.890.13,  during the previous week.

On Monday, the dollar inched up but remained near its lowest level in three months. The currency usually moves inversely to the yellow metal. The benchmark 10-year Treasury yield fell and remained near a week low.

Inflation expectations are recently fading due to the U.S. central bank’s commitment to its currently dovish policy. But investors still worry that the U.S.’ continuous recovery from the health crisis could fuel price pressure. Moreover, the central banks could start to pull back the unprecedented stimulus measures.

Governor Lael Brainard, along with several Federal Reserve officials are due to speak throughout the week.

Policy Decisions

Several central banks are set to hand down their policy decisions this week. On Tuesday, the Bank of Indonesia will hand down its decision, followed by the Reserve Bank of New Zealand on Wednesday. The Bank of Korea will hand down theirs on Thursday.

Bank of Japan governor Haruhiko Kuroda is set to speak later in the day.

In cryptocurrency, investors are keeping an eye on Bitcoin’s volatility. Cryptocurrencies offered an alternative to gold for those seeking an asset separate and apart from the day-to-day workings of governments. This was according to the former U.S. Treasury Secretary Lawrence Summers. 

They could potentially remain as a feature of global markets as something akin to digital gold. This is even if their importance in economies remains limited, he added.

Palladium, another precious metal, retreated 0.1%, silver was steady at $27.52, and platinum advanced 0.4%.

Meanwhile, oil prices recouped some of last week’s losses on Monday.  A potential snag emerged in reviving the 2015 Iran nuclear deal. This could add more oil supply, with indirect talks between Washington and Tehran set to continue this week.