According to Warren Patterson and Ewa Manthey of ING, gold has increased on Monday as declining oil prices allay worries about inflation and put pressure on the US dollar (USD) and Treasury yields. They caution that any hawkish surprise from the Federal Reserve (Fed) could limit additional upside in the short future, but they suggest gold should remain supported near present levels provided yields stay restrained.
Bullion is supported by lower yields and a weaker dollar.
"As a significant drop in oil prices allayed worries about inflation and the possibility of additional monetary tightening, gold prices increased on Monday. The action came after a lull in US-Iranian hostilities.
"The US dollar and Treasury yields were also impacted by lower oil prices, which improved the outlook for non-yielding assets ahead of this week's Federal Reserve meeting."
"For additional direction on the interest-rate outlook, markets are now looking to the Fed and impending US inflation data."
"If yields keep limited, gold should continue supported near current levels."
Bullion is supported by lower yields and a weaker dollar.
"As a significant drop in oil prices allayed worries about inflation and the possibility of additional monetary tightening, gold prices increased on Monday. The action came after a lull in US-Iranian hostilities.
"The US dollar and Treasury yields were also impacted by lower oil prices, which improved the outlook for non-yielding assets ahead of this week's Federal Reserve meeting."
"For additional direction on the interest-rate outlook, markets are now looking to the Fed and impending US inflation data."
"If yields keep limited, gold should continue supported near current levels."
