Since March, Gold extended its biggest advance as weak US data lessened expectations of a tightening of the Federal ReserveFederal Reserve, marking a sentiment shift in the precious metals markets.
The dollar fell 2.4% as Treasury yields and Treasury yields fell after a US manufacturing gauge declined more than expected. That has helped increase the allure of the non-yielding metal, which usually has a negative correlation with the dollar and bond rates.
On Tuesday, gold climbed as much as 0.6%, with the dollar sliding to the lowest in more than a week because of improved risk appetite in equity markets. The metal is trading above $1,700 an ounce and closes in on its 50 day moving average last breached in August, which would signal a major change in sentiment.
Gold broke the $1,700 an ounce mark again, meaning that the break below $1,660 -- 1,700 an ounce was for me a false break, said Georgette Boele, analyst at ABN Amro Bank NV. If that continues, we probably have seen the lows for now. Traders are waiting for US non-farm payrolls this week to get more clues on the future path of central bank monetary policy, which will be crucial to the gold outlook. A weaker than expected print could diminish rate hike expectations, further emboldening bullion at a significant technical turning point.
Other US employment data, including job openings and the ADP Research Institute s figures, will also be key this week. The Fed has struggled to weaken the labor market with tighter policy, a part of its battle with decades of hot inflation.
Spot gold rose by 0.5% to $1,708. In London, 64 an ounce was at 11: 01 a.m. and touched a three-week high earlier in the day. The Bloomberg Dollar Spot Index weakened by 0.3% after a 0.5% decline on Monday. It added to its rally on Monday, when it went up 8.8% as short-covering drove it through several key technical levels. Platinum and Palladium went up.
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