Forex

The dollar’s decline has made gold prices reach a 3-½ month high

The surge of dollar

The price of gold was on the positive territory on Wednesday’s opening session as it touched its best level since September 15. This was after the U.S. dollar’s poor performance against its major peers.

The index which tracks the value of the greenback against is major opposing currencies, the U.S. dollar index, dropped to an almost three-month low yesterday after analysts projected the U.S. Federal Reserve will gradually lift interest rate this year.

The U.S. currency experienced its largest decline since 2003 last year. However, this downfall has strengthened gold futures as the bullion rose more than 13 percent the entire year.

Looking at the price of gold, U.S. gold futures edged up by 0.5 percent to end at $1,322.40 per ounce. Spot gold jumped by 0.2 percent to finish at $1,320.77 per ounce. Spot reached a 3-½ month high at $1,321.33 per ounce on its last settlement.

Wang Tao, a technical analyst from Reuters, said that spot gold might break resistance at $1,326 an ounce, and will further rise towards the next resistance at $1,38 an ounce.

It is already given that gold will benefit from the decline of U.S. dollar because it will make prices lower for holders outside United States. It is also fragile on interest rate hikes because it will heighten the opportunity cost of owning the yellow metal.

In other metal news, palladium rose to its record highs on the previous session at $1,096.50 an ounce, after concerns that there might be a supply shortage, following its 57 percent rise last year.

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