After steady trading on Monday, gold was not able to consolidate at a more than 4-month peak. For almost the entire day, the quote was declining, falling at one point to an intraday low of $1,873.20.
The tipping point for gold took place yesterday thanks to a decline in the yield of 10-year US government bond yield. It tumbled to almost the lowest value since the beginning of the month-1.567%, while at the previous close it was 1.608%.
Gold was also supported by the weakening US dollar. On Tuesday, the US dollar index continued its downward movement, which began on Monday. It was trading below 90.
Gold started to steadily move up to the resistance level of $1,900. It broke above this level after 21.00 Moscow time for the first time since January 8.
Nevertheless, gold ended the session on the New York COMEX exchange near the threshold value. The final price was $1,896. 80. Thus, gold rose by $13.50 or 0.7% compared to the previous close.
Silver also climbed by 0.5% or 15 cents yesterday, hitting $28.06.
The mix of low US Treasurers yields and a weak US dollar has made gold and silver more attractive to investors, James Hatsiiannis, a chief market strategist at Ploutus Capital Advisors, said. In the current situation, gold may decrease only due to some fundamental factors.
The expert also mentioned a number of reasons why in the near future gold price will continue the upward trend. Currently, its rally is supported by technical indicators and positive fundamental factors.
In addition, high demand from long-term investors and an increase in the inflow of funds to gold also give a boost to the price of gold.
Due to the drastic decline of cryptocurrencies, traders are more inclined to invest in more reliable safe-haven assets. Thus, gold may approach the level of $1,900. Notably, gold did not correct downwards even after China's recent statements about its intention to restrain the growth of prices in the commodity market.
On Wednesday morning, we can see that the expert's forecast came true. Gold gained momentum in the middle of the week. It not only managed to break through the resistance level but also consolidated above $1,900.
So, at the time of writing this article, gold was trading at $1907.2. Compared to the previous close, gold climbed by $9.2 or 0.48%.
Meanwhile, silver is also showing a positive trend. The quote jumped by 0.88%, reaching $28,302.
According to analysts, the main reason for the current rally of precious metals is the easing of concerns about the tightening of the Fed's monetary policy. At the beginning of the week, the Fed again made dovish comments on the monetary policy.
Gold is also edging higher amid the decrease of the US dollar. The US dollar index has been falling for the third consecutive session, trading at 89.61.
In addition, the precious metal advances amid fresh macroeconomic statistics from the US. Yesterday, the US consumer confidence index and data on new home sales were published.
The first indicator was worse than predicted. US consumer confidence dropped to 117.2 this month from a revised April reading of 117.5. Experts forecast a decline to 119.5.
The second indicator also failed to meet the expectations of economists. Experts predicted that in April, new homes sales in the United States would exceed 950,000 per year. However, they were significantly lower at the level of 863,000. The figure plunged by almost 6% compared to February.
