The Conversation (0)
The gold price rallied on Thursday (November 1) after hitting a three-week low in the previous session. The yellow metal climbed on the back of a tumbling US dollar.
After hitting a three-week low in the previous session, gold rallied over 1 percent on Thursday (November 1) on the back of a sliding US dollar.
The yellow metal was given space to climb as the dollar retreated from multi-months highs, thus making the precious metal cheaper for investors using other currencies.
“Today’s move is largely a reaction to dollar weakness and that naturally is an opportunity for gold prices to move higher,” said Marcus Garvey, commodities strategist at ICBC Standard Bank.
According to Reuters, the dollar index, which measures the US unit against six other major currencies, fell 0.7 percent, dropping from a 16-month high it was able to hit on Wednesday (October 31).
“[P]recious metals are seeing good buying interest as the US dollar index is posting sharp losses today, on a corrective pullback from recent gains that pushed the index to a 16-month high Wednesday,” stated Jim Wyckoff, senior analyst at Kitco.com.
The greenback’s retreat gave gold its biggest rally in over three months, however, stock market strength limited the yellow metal’s gains.
“Traders in both metals have stepped in to buy the dips on some perceived bargain hunting, and by heavy short covering from the futures traders,” noted Wyckoff.
Investors have turned their attention to Federal data released on Thursday that showed new applications for US unemployment aid fell last week and the number of Americans receiving benefits was the lowest in more than 45 years thanks to a tightening in labor market conditions.
Moving forward, market watchers will focus on non-farm payrolls data, which will be released on Friday (November 2) and should provide more details on the current strength of the US economy.
“The key nonfarm payrolls number is forecast to come in at up 188,000. However, Wednesday’s ADP national employment report reading of up 227,000 suggests Friday’s jobs report could be stronger than forecast,” revealed Wyckoff.
Investors are also watching the US congressional elections which take place next Tuesday (November 6). Midterms will determine whether the Republican or Democratic party controls the US Congress, with many predicting increased market volatility based on the outcome.
The yellow metal fell in the three previous sessions and touched its lowest since October 11 on Wednesday when it traded at US$1,211.52 per ounce.
As of 3:25 p.m. EST gold was up 1.71 percent, trading at US$1,233.60 per ounce.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
