Gold price gets comfortably above $ 2,000 at follow through buy, weaker US dollar

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(Kitco News) – The gold market continues to gain momentum from a weaker U.S. dollar, which fell Tuesday after a fresh two-year low.

During the day, gold prices soared solidly above $ 2,000 an ounce when it returned to last week’s lost ground‘s selloff. December last traded at $ 2,018.30 an ounce, up 1% on the day.

“Gold has won about $ 60 since yesterday afternoon, “said commodity analysts at Commerzbank. “The surge in sentiment to gold is also evident from the fact that the gold ETFs, followed by Bloomberg, re-registered inflows yesterday for the first time in seven days of trading. “

However, the market still has a ways to go to reach its all-time high of $ 2,076 per ounce.

Meanwhile, the US dollar index traded at 92.55 points, down 0.28% on the day. Some currency analysts have said the US dollar will continue to fight as bond yields continue to fall after hitting a one-month high recently. Yields on US 10-year bonds fell last night after a session low of 65 basis points.

Analysts at Brown Brothers Harriman said in a note published Tuesday morning that there is a risk for the US dollar to fall below 90 points as recession worries begin to rise.

“DXY is down five straight days and was suspended last week‘s cycle low at 92.52, ”said the analysts. “After the low of May 2018 close to 92,243, there are no significant levels until the April 2018 low of 89,229. Delays to the next round of stimulus support our view that the U.S. economy will underperform in Q3, which should also translate into dollar underperformance. “

Coupled with the weak US dollar and declining yields of real bonds, commodity remarks suggest that growing geopolitical tensions between China and the US support gold as a safe haven asset.

With gold back above $ 2,000, some commodity analysts say it’s only a matter of time before prices push back to new highs.

“Despite last week‘s correction, the factors that brought bullion to the dance are still present. Central banks and deficits remain in play, there will be elections in the US, and tensions with China will get worse than ever, ”Marios Hadjikyriacos, market analyst at brokerage firm XM, wrote in a note on Tuesday.

Last week‘s selloff has not done much to dampen market sentiment in the long run.

In a recent note, analysts at Citi lifted their short-term outlook for gold, seeing prices push down to $ 2,100 over the next six to 12 months. The analysts added that “$ 2,300 / oz breaks seems plausible. ”

“The record rate of influx of ETF investors, a weakening of US $ and negative real returns are the primary drivers for the push higher, ”the analysts said.