Gold futures climbed Wednesday, recouping the prior day’s loss and then some to finish at their highest level in nearly a month, with the metal finding support from weakness in the U.S. dollar; war in Ukraine and strong demand in Asia.
Gold for June delivery (US:GCM3) climbed $24.90, or 1.7%, to settle at $1,893.70 on the Comex division of the New York Mercantile Exchange. That was the highest settlement for a most-active contract since April 12, according to FactSet data.
On Tuesday, prices for the precious metal fell $19.20, or 1.3%, as data suggested commodity exchange-traded funds in April logged a record month of withdrawals.
Overall, “gold looks resolutely range-bound at the moment,” said chief economist at BullionVault.
In the West, “investor sentiment towards gold seems lukewarm at best among professional money managers right now,” he said. However, “demand in Asia is holding up.”
On the Shanghai Gold Exchange, the last two days of trading have seen more than 20 metric tons of the most popular “four nines” spot gold contract — for gold of 99.99% purity — traded, according to Traynor.
For comparison, back on Feb. 18, the first day back after Lunar New Year, the exchange saw 22 metric tons traded in that contract, he said, adding that at the time, it was a record, though that record was “smashed” last month.
Gold’s gains also followed Chinese trade data, which showed a swing to a surplus in April after a small deficit in March.
Gold’s climb makes sense “when you consider that China’s imports of the yellow metal from Hong Kong surged to 223.52 [metric] tons in March from 97.11 [metric] tons in February, as physical buyers rushed to capitalize on ‘cheap’ prices,” said Fawad Razaqzada, Market Analyst at forex.com.
Aiding gold’s price rise Wednesday, the dollar (US:DXY) lost ground against most major currencies. Commodities priced in dollars, including gold, tend to trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of metals to holders of other currencies.
‘Wait and Watch‘
In the gold market, “bears seem to be running out of steam,” said Chintan Karnani, an independent bullion analyst based in New Delhi.
On a technical level, if gold is able to trade over $1,936 an ounce over the next three trading sessions, starting Thursday, then prices may rise to $1,990-plus, he said. Still, Karnani said he’d “prefer to wait and watch and not get too optimistic in gold.”
Outflows from ETFs were among the factors analysts had cited as being behind a slide in gold prices last month, though reports of stronger demand for physical gold had recently helped them come off their lows.