Investing.com – Gold prices hovered above breakeven supported by ongoing dollar weakness ahead of an inflation report which could strengthen the Federal Reserve’s case for more aggressive monetary policy tightening.
Gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose by $3.40, or 0.26%, to $1,329.80 a troy ounce.
The dollar fell for a second straight day in row pressured by large gains in both the euro and yen, helping gold prices remain steady a day ahead of an inflation report which could offer markets with fresh direction.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal.
Also supporting gold prices was a uptick in demand ahead of the start of the Chinese New Year which usually ushers in gift buying in the form of gold jewellery. The biggest demand for gold is for use in gold jewellery which accounts for roughly 50% of total demand, according to the World Gold Council.
“Based on the local premiums to international gold prices, it appears that demand ahead of the Chinese New Year has been relatively strong,” Capital Economics analyst Simona Gambarini said Monday in an email to clients.
Gold prices continued to recover losses following last week’s slump despite CFTC COT data showing money managers cut their long bets on gold last week for the second week in a row.
In other precious metal trade, silver futures rose 0.21% to $16.54 a troy ounce, while platinum futures gained 0.39% to $976.40.
Copper rose 2.25% to $3.16, while natural gas rose 2.78% to $2.62.