Gold hovers around $1,500; sees best week in three years

09 Aug, 2019

Spot gold was up 0.3% at $1,503.69 per ounce at 10:30 a.m. EDT (1430 GMT) after it surpassed $1,500 for the first time since April 2013 earlier this week.

US gold futures rose 0.4% to $1,515.20 an ounce.

"Gold is where it is right now because it seems to be the perfect environment for it between central banks cutting interest rates and negative yielding debt," OANDA senior market analyst Craig Erlam said.

"Gold has gone up so much and is going to reach a point where people will start questioning whether it is overbought ... and whether correction is on the cards."

German long-dated bond yields tumbled to record lows in negative territory on Wednesday, while Dutch 30-year and Irish 10-year yields turned negative for the first time on Monday.

The central banks of New Zealand, Thailand and India stunned markets with a series of interest rate cuts, pointing to policymakers' dwindling ammunition to fight a downturn.

The US Federal Reserve also cut its benchmark interest rate for the first time since 2008 last week.

"The trade spat is driving the market crazy. We don't rule out technical corrections, but $1,500 is now the new normal unless trade relations take a turn in a right direction," said Jigar Trivedi, commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers.

Bullion has risen 4.4% so far this week - the biggest since April 2016 - and about 17% for the year, gaining more than $100 in the past week.

On the technical front "if we can go past the pivotal $1,520-$1560 region, it would start to a look a lot bullish. ... For it to move that far ahead we need to see more convincing sign for something darker on the horizon," OANDA's Erlam added.

On the investment side, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, has gained about 1.8% this week and about 7.3% in 2019.

Precious metal funds recorded the fourth-largest inflows ever in the week to Wednesday and investment-grade funds sucked in money, Bank of America Merrill Lynch said on Friday.

Elsewhere, silver rose 0.8% to $17.03 per ounce and was on course for a weekly gain of nearly 5%. Platinum gained 0.4% to $863.65, while palladium climbed 0.6% to $1,430 an ounce.

Copyright Reuters, 2019

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