Weaker USD, More Dovish Fed Boost Gold Prices
Gold prices rose to the highest in nearly three weeks, boosted by a weaker U.S. dollar and more cautious Federal Reserve.
The gold price for June delivery rose 1.3% to $1,259.40 at 11:40 a.m. on the Comex division of the New York Mercantile Exchange. Gold prices logged their best weekly gain in three weeks on Friday.
The ICE U.S. dollar index, which compares the greenback to a basket of currencies, was down 0.3% at 93.88, after touching a low of $93.74. A weaker dollar makes assets priced in the currency more attractive to investors using other currencies.
On Friday, New York Fed President William Dudley said the central bank must take a dovish approach to further rate hikes because of prolonged external risks to the U.S. economy, despite some strength at home and positive hints of inflation.
The SPDR Gold Trust ETF (NYSEARCA:GLD) added 1.4% to $120.12, after touching $120.30, the highest intraday price since March 18.
RBC Capital Raises 2016 Gold Prices Forecast
RBC Capital Markets provided a bullish approach to the yellow metal. In a research note, they said they were increasing their average gold price forecast by nine percent to $1,250 a troy ounce in 2016 and by eight percent to $1,300 a troy ounce for 2017.
Gold mining stocks also soared on Monday following an upbeat research note on the sector from RBC Capital.
The Market Vectors Gold Miners ETF (NYSEARCA:GDX) rose 4.7% to $22.45.
Kinross Gold Corporation (NYSE:KGC) jumped 7.7% to a 52-week high of $4.25 after the Toronto, Canada-based company was upgraded to “outperform” from “sector perform” at RBC Capital.
American depositary receipts of AngloGold Ashanti Limited (NYSE:AU) advanced 5.3% to a fresh 52-week high of $15.47. The South African company was upgraded to “outperform” from “sector perform” at RBC.
Goldcorp Inc. (NYSE:GG) gained 3.6% to $17.75 even as RBC lowered the Vancouver, Canada-based company to “underperform” from “sector perform”.
In other gold mining stocks, Barrick Gold Corporation (NYSE:ABX), the world’s largest producer of the metal, expanded its 2016 gains to 119% after adding 6.3% to a fresh 52-week high of $16.23.
Yamana Gold Inc. (NYSE:AUY) rallied 7.2% to $3.88.
Elsewhere on Comex, May silver surged 3.4% to $15.91 a troy ounce, platinum advanced 2.7% to $994.2, while palladium gained 2% to $549.30.
Gold prices have rallied 20.3% since their 52-week low of $1,047 reached on December 3.