Gold extends gains

Gold on Monday extended its biggest weekly gain in five weeks as the US dollar fell against the euro, while US political turmoil fueled demand for bullion as a safe haven and reduced expectations of rapid US interest rate rises.
Spot gold was up 0.3 percent to $1,258.72 an ounce at 1442 GMT, while US gold futures were 0.4 percent higher at $1,258.80.
US stocks gained on Monday but yields edged lower and the dollar plunged to a six-month low when the euro rallied after German Chancellor Angela Merkel said it was “too weak” for Germany.
Gold investors were looking to news from Washington, said Commerzbank analyst Carsten Fritsch. “If this escalates further and impeachment claims intensify, Trump will find it very difficult to push forward his ambitious tax cut and infrastructure spending plans,” Fritsch told the Reuters Global Gold Forum on Monday. INTL FCStone analyst Edward Meir said: “This should be bullish for gold since it should keep the (US) Federal Reserve more dovish on the rate front for a little while longer.”
Higher interest rates would pressure gold prices because they raise bond yields and tend to boost the dollar. St. Louis Federal Reserve President James Bullard said on Friday that expected rate increases may be too fast for an economy that has shown recent signs of weakness. However, Julius Baer analyst Carsten Menke believes that a June rate rise remains highly likely. “(As a result) we expect the dollar to strengthen again and that should cap the upside to gold from here,” he said, adding that the metal is likely to dip to $1,200 over the next three months.
Investors’ net long position in COMEX gold, meanwhile, has fallen to a two-month low, US Commodity Futures Trading Commission (CFTC) data showed on Friday.

Source: Arab News