18 May 2021
Gold Surges to Three-Month High
Gold prices increased 1.56% to $1,873/oz on Monday – reaching a three-month high – while the Dollar index weakness continues. The greenback declined by 1.15% from its 5-day high on the back of falling U.S. Treasury bond yields, higher than expected U.S consumer price inflation and weaker retail sales.
This combination created a potent tailwind for gold prices recently, recovering from March lows of $1,680/oz, having crested in August last year at $2,067 per oz. Prices have been within a bearish trend channel since then – however, after gold successfully breached the 200-day moving average, it has found new resistance at the $1,888/oz.
Inflation numbers in the U.S are still a troubling narrative for investors. Markets have been warning that the government’s hefty pandemic spending could push inflation higher. Accordingly, economic data is suggesting that as the economy regains steam, demand is coming back faster than supply – causing a spike in supply chain producer prices, which should filter into consumer price increases as spending increases.
The yellow metal was last seen trading at $1,868/oz
Jaco Lups
Analyst
