Gold price reached a six-year high on Tuesday as the weaker dollar, prospects of monetary easing by the US Federal Reserve and growing US-Iran tensions continued to stoke bullish sentiment in the market. The precious metal has leaped 10% in four weeks, breaking above technical resistance which has thwarted every rally for half a decade to finally rise above 1,400 USD.
The sot gold hit its highest since May 2013 at 1,438.63 USD per ounce earlier on Tuesday, before easing slightly to stand 1,430 USD per ounce by 06:10 a.m. ET, up 0.8% on the day. The market is set for a sixth consecutive session of gains and has gained 9.6% so far this month. The metal has added around 100 USD in the past week alone.
The US gold futures jumped by 1.1% to 1,436.20 USD per ounce.
The uptrend continued after it became clear that gold funds raised their assets by 32 tons on Friday, which is the highest rise since 2016. On Monday, the growth continues with holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rising by 0.37%.
At the same time, hedge funds and other larger speculators have increased their net long positions in US gold futures and options to the highest level since February 2018. This is clear from the latest data of the Commodity Futures Trading Commission.
Gold prices have also been supported by central banks buying the metal at the fastest rate in decades to diversify their reserves. Against that backdrop, speculative investors have piled in. Their bets on higher gold prices on the COMEX exchange now outnumber wagers on lower prices by 189,681 contracts, the most in more than a year. That is equivalent to almost 19 million ounces, worth some 26 billion USD.
Exchange-traded funds (ETFs) meanwhile have added more than 2 million ounces to their holdings since early May, helping push prices higher.
The price of gold continues to receive support from rising expectations of a 50 basis point cut in key interest rates during the Federal Reserve meeting in July. The question is no longer whether the Fed will ease its policy, but how much. From a historical point of view, the Fed likes to start a loophole and a 50 basis point cut should be the best scenario.
Moreover, the planned US sanctions against Iran, as well as the upcoming meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, also create bullish attitudes to the price of the precious metal.
The analysts remain bullish toward price action with ETFs continuing to see inflow and the dollar continuing to falter. However, it is likely following the recent run higher that we will see a period of consolidation into the financial year-end. Supportive interest should now sit toward 1,420 USD, with broad extension towards 1,400 USD, while resistance is evident from 1,440-1,450 USD.
Expectations are that gold will end the year even at even higher levels. According to the latest analysis, the gold could rise as high as 1,500 USD by the end of the year. Last week, gold grew by 4.3% – its biggest jump since April 2016.
Among other precious metals, silver was up by 0.2% at 15.45 USD per ounce and platinum gained 0.6% to 814.58 USD per ounce. Meanwhile, palladium fell by 0.5% to 1,527 USD per ounce after hitting its highest level since March 27 at 1,545.87 USD earlier in the session.