• Saturday, March 02, 2024
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Gold rises to highest level in three weeks


Gold rose one percent to its highest level in three weeks on Monday, as the dollar and equity markets fell further following mixed U.S. data, drawing investors to the asset while robust Asian demand also lent support.

The metal’s 3 percent rally since the start of the year follows a 28 percent loss in 2014, its worst annual performance since 1982.

Spot gold rose to a three-week peak of $1,248.30 an ounce after a private index of U.S. services industries’ activities unexpectedly fell in December, signalling a slowing in overall economic growth at year-end.

But selling picked up rapidly and prices then turned negative before regaining ground again, with traders saying that there may have been a short-lived attempt to re-build short positions after the past few sessions’ gains.

Prices were up 0.4 percent at $1,240.70 an ounce by 1541 GMT. U.S. gold futures for February delivery rose 0.6 percent to $1,245.70 an ounce.

Analysts remained cautious on gold’s current prospects and some said it might retreat during a week filled with events and data releases, after a two-week holiday break.

“This is the first day of increased liquidity after the festive break and I wouldn’t read much into the gold price moves that we have seen in the past few sessions,” ABN Amro analyst Georgette Boele said.

“The drivers will remain the same and investor sentiment will also be crucial, of course this week we have the Fed’s minutes and the U.S. non-farm payrolls, which will give some market direction and strong numbers should be dollar-supportive and adding pressure on gold.”

Traders will now focus on U.S. nonfarm payrolls and trade numbers on Friday for clues on the strength of the economic recovery, while the minutes of the December Fed policy meeting – at which the central bank decided to cut back bond purchases – may hint at how aggressive the Fed will be with tapering.

Ben Bernanke, who steps down as head of the Fed at the end of January, on Friday gave an upbeat assessment of the U.S. economy in coming quarters, though he did temper the good news in housing, finance and fiscal policies by repeating that the overall recovery “clearly remains incomplete”.