From a near 4-month low in the previous session, gold prices inched up on Monday, with a drop in equities and a jump in crude oil prices. Spot gold was up by 0.3% at $1,278.74 per ounce, having touched $1,270.63 in the previous session — its lowest since December 27, 2018.
Weighed down by under-performing Chinese stocks, the Asian shares slipped and oil prices rallied on news.
“Higher oil prices influence gold prices. While the intensity of correlation between oil and gold has reduced, buying one kind of asset supports the other,” Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers, said.
Gold is closely related to oil as it is often seen as a hedge against oil-led inflation. However, a firm dollar capped gains for gold after data showed the United Sates’ economic growth might have picked up in the first quarter.
“The recent bomb blasts in Sri Lanka increases demands for the metal, besides the interest in physical buying, which is also offering support to gold prices. However, the metal is facing strong resistance at $1,280, which is a big barrier. Another reason the market is not rallying is the stronger dollar,” Afshin Nabavi, senior vice-president at MKS SA, said.
Meanwhile, speculators switched to a net short position in COMEX gold in the week to April 16, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
In addition, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped to 751.68 tonnes on Thursday, the lowest levels seen since October 26. “Gold is hovering between the 100-day exponential moving average around $1,285 and 200-day exponential moving average around $1,275, below this we can look for $,1260,” Trivedi of Anand Rathi said.
Elsewhere, silver rose 0.7% to $15.02 per ounce. Platinum gained 0.7 per cent to $906.75 per ounce. Palladium was steady at $1,422 an ounce, having earlier climbed to its highest in over two weeks at $1,428.98 an ounce.
