On Monday, gold not only hit the high recorded early this year but also moved steadily on the charts.
Gold futures for delivery in June closed at $1,884.56 on the COMEX exchange. The difference in value from the previous day's closing price was 0.4%, or $7.80.
Thus, the bullish trend in the gold market continued. Despite falling on Friday, gold soared by more that 2% last week.
Yesterday, silver also advanced by 1.5%, or $0.42, closing at $27.91. Last week, silver gained 0.4%.
At the start of this week, precious metals went up as the US dollar and yields on government bonds dropped.
Gold is extremely sensitive to these factors. Thus, the weaker greenback makes the asses more accessible to holders of other currencies. Meanwhile, a decline in yields increases its attractiveness among investors.
On Monday, the US dollar index dropped by 0.2% against the basket of 6 main currencies. Meanwhile, the yield on 10-year US bonds fell to its 2-weeks low of 1.62%.
Another important driver of the price of gold is the crypto rush. A plunge in the value of BTC and other popular digital coins made investors review their investment choices.
Many traders have sold their virtual currencies after the cryptocurrency market collapsed. They are now considering investing in gold, thinking that it is a more reliable asset than highly volatile BTC.
On Tuesday, gold is still trading near $1,880. At the moment of writing, gold futures for delivery in June were at $1,878.65, losing 0.31%, or $5.58, in comparison with yesterday's closing price.
Despite bear movement, the quotes remain relatively stable. Thus, if the price consolidates, the bullish trend is likely to extend.
Yesterday, St. Louis Fed President James Bullard said an increase in inflation did not surprise the regulator. The Fed expects inflation to rise above 2% in 2021 and into 2022. He also added that growing inflation was just temporary and monetary policy would not change after the pandemic.
According to Ed Moya, a Senior Market Analyst at OANDA, the gold market will remain bullish in the short term.
The most important barrier for gold is the resistance level of $1,900. It is not clear whether the precious metal will break it until the end of the month. However, experts suggest that gold will show its best monthly performance in May since the end of last year.
There have been many factors that boost the price of gold in May. But the main ones are growing inflation concerns and an uneven recovery of the global economy after the pandemic.
