On Tuesday (December 1), gold prices rebounded sharply from a five month low, with spot gold rising more than $40 at a time, breaking a three-day high to $1817.35/oz;
Spot silver rose more than 6%, reaching a new high of $24.046/oz since November 23. The dollar index (91.2282, 0.0360, 0.04%) fell sharply again under the influence of strong stock market risk preference, and the bet on the US stimulus plan stimulated the attractiveness of gold and other precious metals as inflation hedging tools.
The U.S. dollar index fell against most major currencies on Tuesday, falling 0.82% in the session to a new low of 91.26 since April 2018. Progress in the development of coronavirus vaccine and news of bipartisan stimulus plans boosted the demand for risk assets.
In a speech released on Monday, Federal Reserve Chairman Colin Powell highlighted the challenges of vaccine production and mass distribution before the impact on the economy will be clear.
COMEX gold futures for February closed up $38, or 2.1%, to $1818.90 an ounce, while today’s gold futures recorded its biggest one-day gain since November 5, according to FactSet. Edward Moya, senior market analyst at OANDA, said: “we are seeing gold return to its level of $1800 an ounce, which is largely related to the weakness of US dollar trading.”
Spot silver rose 6 per cent, breaking the $24 barrier, its highest level in more than a week. In a report, fawad razaqzada, a market analyst at thinkmarkets, said the increase in industrial demand should help silver outperform gold.
Rhona O’Connell, head of market analysis at stonex group, a financial services firm, said gold has now returned above the 200 day moving average, which is very important both psychologically and technically, and may support further gold price increases, while the short-term moving average also provides support for gold once again.
Giovanni staunovo, commodities analyst at UBS, points out that according to our model, gold should be around $1850 an ounce, not less than $1800.