Gold News

Gold Price Gains in Falling Dollars as Crude Oil Jumps

GOLD PRICES in terms of the Dollar rose Monday morning as the US currency sank to 1-month low on the FX market with oil prices surging to 2-month highs amid fresh supply concerns, writes Atsuko Whitehouse at BullionVault.
Spot gold prices rose as high as $1863 per ounce before paring most of that gain back to $1855 after the yellow metal made a 2nd consecutive weekly gain last week for US investors.
Gold priced in Euros in contrast slipped 0.3% to €1723 per ounce as the 19-nation currency rose amid hints that the European Central Bank will move towards "lift off" for its currently sub-zero interest rate in July.
The UK gold price in Pounds per ounce meanwhile held almost unchanged from Frida's close at around £1467.
"[The] softer Dollar and lower bond yields" helped edge gold prices higher," says spread-betting platform Saxo Bank's commodity strategy team, "as well as rising fuel prices supporting a fresh attempt to challenge key support at $1868/70."
Oil prices rose on Monday, hitting their highest in more than 2 months, as both the Brent crude futures contract and West Texas Intermediate (WTI) crude futures jumped as high as 0.5%.
Oil prices are up 5% on the month so far in May.
Chart of Brent crude oil, US Dollars per barrel. Source: St.Louis Fed
The US Dollar Index today edged lower against other major currencies after recording a 2nd straight weekly decline with a new monthly low last Friday.
While US stock and bond markets were closed on Monday for the Memorial Day holiday, US Treasury yields had been subdued after the benchmark 10-year note hit a fresh six-week low. 
Meantime, EU governments failed to agree on an embargo on Russian oil on Sunday but said they will continue talks on a deal to ban seaborne deliveries while allowing deliveries by pipeline.
Hungary says an oil embargo would be "a body blow" to its economy, which relies on Russian oil and gas supplies, while Slovakia and the Czech Republic have expressed similar fears.
The Opec+ cartel of oil producer nations, which includes Russia, is set to stick to an oil production deal agreed last year despite Western calls for a faster increase.
"Crude prices are also finding support from a weaker US Dollar, and China's easing of virus-related restrictions," says Sunil Katke at Kotak Securities in India.
Shanghai will ease a 2-month lockdown of its 25 million population from 1 June, a city official said on Sunday.
China's Covid Zero policy sent April retail sales and industrial output plunging to the worst levels in since the pandemic began in early 2020.
Gold prices on the Shanghai Gold Exchange meantime continued to show a premium to London, steadying at $3 per ounce on Monday after wholesale bullion in the metal's No.1 consumer market increased the monthly average to $2.6 so far in May from $0.2 in April.
European stocks meanwhile climbed to the highest in 3 weeks on the EuroStoxx600 index even as  German inflation data said the cost of living in the Eurozone's No.1 economy jumped to an annual 8.7% in May, exceeding economist expectation of 8.0%.
Spanish inflation also rose, up to 8.5% and exceeding expectations of 8.2%. 
Wall Street had its best week since November 2020 last week, after the Federal Reserve's preferred inflation gauge of the US core personal consumption expenditures price index rose 4.9% for April from a year before, a slower pace from the 5.2% reported in March.
The S&P 500 rose 6.6% for the week. The gain broke a seven-week losing streak for the market, the longest such stretch since 2001.
Both the Dow Jones Industrial Average and the tech-heavy Nasdaq gained 6.3% and 6.8% last week.


Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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