LONDON: Gold rose on Monday as a softer dollar helped the metal rebound from its biggest weekly loss this year, while traders awaited Federal Reserve Chair Jerome Powell’s debut congressional testimony this week for clues on the next direction of trade.
The dollar index slid 0.4 percent on Monday, lifting gold after it fell 1.4 percent last week, its biggest weekly drop in 2 1/2 months.
Spot gold was up 0.8 percent at $1,339.75 an ounce at 1056 GMT, while US gold futures for April delivery were up $11.30 an ounce at $1,341.60.
MKS head of trading Afshin Nabavi attributed the rebound in gold to the dollar move, and a return of interest from major consumer China, where a week-long holiday ended last week.
“I think $1,361 may be on the cards,” he said. “If we can break that level then we should be heading higher, otherwise $1,315-1,361 should be the trading range for the time being. $1,361 is the level we held last time gold tried to stage a rally.”
European stocks rose 0.5 percent on Monday as investors bet Powell will flag up an intention to steer a steady course on US monetary policy when he addresses lawmakers this week. That view weighed on US 10-year Treasuries yields, dragging down the dollar.
The Fed, looking past a recent stock market sell-off and concern about inflation, said on Friday it sees steady growth continuing and no serious risks on the horizon that might pause its planned pace of rate hikes.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion and strengthen the dollar, in which it is priced.
The heads of the European Central Bank and Bank of England are also set to give speeches this week.
Hedge funds and money managers raised their net long positions in COMEX gold contracts in the week to Feb. 20, US Commodity Futures Trading Commission data showed on Friday, though they reduced positions in palladium.
“In palladium, money manager long position has been decreasing for six consecutive weeks and is at the lowest level in over a year,” Societe Generale said in a note.
Source: Brecorder.com
