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Gold Rises Above $1,200 on Safe Haven Demand and Weak USD

Gold prices are higher, hit a four-week high and have pushed above what was psychological resistance at the $1,200.00 level Thursday. Several factors are working in favor of the gold market bulls, including safe-haven demand and the slumping U.S. dollar index. April Comex gold was last up $13.10 at $1,210.00 an ounce. May Comex silver was last up $0.18 at $17.18 an ounce.

Asian and European stock markets sold off overnight and U.S. stock indexes are under pressure early Thursday morning, amid a “risk-off” attitude in the world market place.

The solid losses in U.S. equities on Wednesday, following a downbeat durable goods orders report, prompted some of the weakness in stock markets in Asia and Europe. Also, Saudi Arabia and its allies’ air strikes against Iran-backed rebels in Yemen have produced fresh geopolitical tension. Saudi Arabia and Iran, the two major Arab powers in the Middle East, are now in a stare-down.

The military action in Yemen was not expected. Crude oil prices rallied sharply to a two-week high above $52.00 a barrel on the news, while safe-haven gold did the same.

Reports overnight said China has moved to allow more companies to import gold into China, which will effectively reduce the premium China’s domestic gold-buyers have had to pay over the world price. The move by Chinese authorities should give a modest boost to gold demand coming from China. The World Gold Council said Chinese demand for imported gold is likely to rise by 11% this year.

The other key “outside market” on Thursday morning finds the U.S. dollar index lower again. The dollar index bulls have faded badly the past week and there are early technical clues of a market top in the index. The weakening greenback has been a bullish underlying factor for the precious metals markets.

via Kitco [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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