Gold contracts closed higher for the second consecutive day on Tuesday (April 4), as the market continued to benefit from the depreciation of the US dollar and the sharp decline in US government bond yields.
Gold futures rose by $37.80, or 1.89%, to close at $2,038.20 per ounce. This marks the highest closing level since March 8, 2022. Meanwhile, silver futures also saw a significant increase, rising by $1.08, or 4.50%, to close at $25.101 per ounce. Platinum futures followed suit, rising by $32.60, or 3.27%, to close at $1,029.00 per ounce. On the other hand, palladium futures dipped slightly by $2.30, or 0.2%, to close at $1,455.70 per ounce.
The rally in gold prices was largely attributed to the weakening US dollar and the sharp drop in US Treasury yields. The dollar index, which measures the value of the US dollar against a basket of six major currencies, fell by 0.5% to 101.5858. Additionally, the 10-year Treasury yield fell to 3.352% overnight, further supporting the demand for gold.
A weaker US dollar makes gold contracts, which are priced in dollars, more attractive for investors holding other currencies. Furthermore, the decline in US Treasury yields reduces the opportunity cost of holding gold, as the precious metal does not offer any interest or dividend. As a result, gold has become an attractive investment option for investors seeking a hedge against inflation and market uncertainties.
The positive momentum in gold prices comes amidst concerns about global economic recovery and uncertainties in the financial markets. Investors are closely monitoring factors such as the US dollar, bond yields, and other economic indicators to gauge the direction of gold prices in the near term.
Market participants are also keeping an eye on the release of US economic data and any further developments in global financial markets, which could impact the demand for gold as a safe-haven asset.
The Spot Market is Open
Wednesday, April 5, 2023