Bullion starts the new working week with growth. They are supported by the ban of cryptocurrencies in the Middle Kingdom, as well as growing concerns about the fate of the Chinese developer Evergrande.
The last seven-day period turned out to be very nervous for gold. On Thursday, the asset fell by 1.6%, ending up at a 6-week low. However, at the end of the week, the quotes were able to grow a little. On Friday, the metal rose 0.1% or $1.90. It closed the session on the New York COMEX Exchange at $1,751.70.
Despite the sharp drop last Thursday, the precious metal ended the week with a slight increase. It rose by 30 cents. The main catalyst for bullion was the news from China, which weakened the appetite of investors for risky assets: stocks and cryptocurrencies.
On Friday, the People's Bank of China said that virtual money does not have the same legal status as traditional currency. The regulator called any activity related to digital assets illegal and promised to strictly suppress the trade in them in the future.
Against this background, the cryptocurrency market fell, which provoked an increase in demand for gold. Moreover, analysts believe that in the near future, precious metals will be able to benefit even more from the Chinese ban on digital assets.
"I think that the price of gold will overcome the resistance of $ 1,840 when there is more clarity on the issue of a potential ban on cryptocurrencies in China," Chintan Karnani, an analyst at Insignia Consultants, shared his opinion.
Also these days, the attractiveness of the yellow metal is increased by news about the Chinese real estate giant Evergrande. The debt-laden firm missed a payment on offshore bonds last week, which increased investors' fears about its default.
"It seems that China does not intend to save Evergrande, but will make attempts to limit the growth of any systemic risks, which may increase the demand for a safe-haven asset," said Edward Moya, an analyst at Oanda.
On Monday, the news from China continues to push the precious metal up. So, at the time of preparing the material, the yellow asset jumped by 0.43% or $ 7.6 and was trading at $ 1,759.25.
At the beginning of the week, gold also receives support from the dollar, which is noticeably weaker compared to its main competitors. This morning, the US currency index dived by 0.11% to 93.22 points.
Analysts also attribute the current rise of the precious metal to the fact that the market has already taken into account the "hawkish" comments of the Fed, which were made last week during the September meeting of the regulator.
Recall that at this meeting, Federal Reserve Chairman Jerome Powell said that the central bank could begin reducing asset purchases this year and complete the process by about the middle of 2022. In addition, it became known that by the end of next year, the Fed intends to raise interest rates.
At the end of last week, the "hawkish" tone became even more distinct. Several Federal Reserve officials said at once that the US economy has already reached the level for the central bank to start curtailing stimulus measures.
However, these comments did not particularly affect the mood of investors, since a more important statement is expected this week. The head of the Federal Reserve is due to address Congress with a report on the central bank's policy in response to the pandemic.
