China, a major player in the commerce of the yellowish metal, was observing the Lunar New Year thus was not a market player as the trade week kicked off. That kept prices of bullion from rising too high while silver futures also edged up in value.
The U.S. Federal Reserve last Wednesday opted to continue slashing monetary stimulus. For the second consecutive month, the body opted to reduce monthly asset purchases by $10 billion. That action from the middle of last week reduces the amount of dollar in the market, which boosts the greenback‘s value. The world’s reserve currency and the precious metal typically perform the inverse of one another.
“The big issue right now is emerging markets’ troubles, which drew gold prices up over the past few weeks, and if the immediate risk coming from that subsides, prices could put gold a little bit lower,” analyst Michael Widmer with Bank of America Merrill Lynch told the news source on Monday.
At 9:26 a.m. on Monday, gold futures rose 0.48 percent, a $5.99 lift to $1,250.54 per troy ounce. Silver futures climbed 0.98 percent, a 19-cent gain to $19.38 per barrel.
Monthly gains despite weekly losses
The yellowish metal is coming off marking its first week of losses in five weeks, having fallen 2 percent last week. But, despite those losses, bullion advanced 3.2 percent during the month of January to achieve its first monthly gains in five months.
The U.S. is preparing to release manufacturing data later in the day on Monday. And later this week, the world’s largest economy is slated to release job market data.
“I think one of the concerns that we have for the emerging markets is the impact on advanced nations, but strong U.S. data makes people a little bit less willing to increase their exposure to gold,” the Bank of America Merrill Lynch analyst told the news source. “There is a lot of data this week, and if you get strength there, that’s supportive for the dollar.”
Chinese holiday, Indian demand impact bullion
Markets in China are closed through this Friday in observation of the Lunar New Year. The Asian nation is the globe’s largest consumer of the yellowish metal. But immediately prior to the holiday, some signals indicated that purchases were down.
“Seasonality shows that the Shanghai-London price differential, a key measure of the strength of Chinese domestic demand, is likely to remain weak over the next two weeks,” ANZ said in a note, according to Reuters.
Another world power in the gold market was seeing a steady amount of purchasing.
The Hindu reports the marriage season in India is one factor that helped bullion gain on Monday as the precious metal benefited by being in demand. Silver futures’ increases were linked with increasing demand issued by various industry given the widespread use of the whitish metal in the industrial sector.
Demand for haven assets was on the rise as equity markets were shaky. In turn, that demand helped push up gold prices.
Bloomberg reports one analyst said that gold futures are poised to demonstrate a measure of strength in the near term. Pointing to equities’ unpredictability, the analyst said that the yellowish metal will enjoy somewhat of a boost as the rough patch ensues.
“We suspect that the global equity markets will likely see more turbulence in February,” states a Monday note authored by analyst Edward Meir with INTL FCStone, according to Bloomberg. “Gold should be fairly resilient for a little while longer.”
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