Gold bulls reclaim some charge at above $2,000 as dollar slides
By Barani Krishnan
Investing.com — The dollar is giving back some of its recovery from one-year lows, enabling gold longs the chance to reclaim some of the upside momentum they lost at the peak of last week’s run to above $2,050 an ounce.
To be sure, the yellow metal doesn’t appear to have the sentiment it did a week ago when it seemed to be on the cusp of a new record high.
If anything, the daily ebbs and flows in gold futures and physical bullion indicate that a wide trading band of recent highs and lows is likely to occur in the coming days as investors absorb final comments by Federal Reserve officials ahead of the central bank’s rate decision on May 3.
“Gold is trying to hold onto the $2,000 level, but critical support may come from the $1,970 region,” said Ed Moya, analyst at online trading platform OANDA. “Gold will have its day in the sun, but it might have to wait a little while longer.”
Gold for June delivery on New York’s Comex settled up $12.70, or 0.6%, at $2,019.70. The session peak for Comex’s most-active gold contract was $2,024.45.
The spot price of gold, which reflects physical trades in bullion and is more closely followed than futures by some traders, got to an intraday high of just under $2,012.
“Gold seems to be waiting for some key triggers to make a decisive move,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.
“If spot gold manages to make a sustained break above $2,015, we think it will open the way for a further upside towards $2,025 and momentum can accelerate towards the next level of $2,032 and the swing high of $2,048,” said Dixit. “On the flip side, if sellers reposition their shorts from $2,025, we are likely to witness another decline towards $1,982, that could extend to between $1,976 and $1,963.”
Tuesday’s run-up in gold came as the dollar fell against most major currencies after better-than-forecast growth data from China, while strong wage growth in Britain supported the pound.
The greenback also lost the tailwind it had in recent days despite St. Louis Fed President James Bullard — possibly the central bank’s most aggressive rate hawk — advocating continuous monetary tightening on the back of recent data showing inflation remaining stubbornly high.
“Wall Street’s very engaged in the idea there’s going to be a recession in six months or something, but that isn’t really the way you would read an expansion like this,” Bullard said in an interview with Reuters.