Gold price hits 7-week high as dollar weakens
The price of gold hit a seven-week high this morning, with spot touching US$1,280.60 per ounce. By 12.30pm UK time, spot gold was at US$1,277.61, up nine per cent on its last close, while US gold futures for June delivery were up US$13.60 at US$1,280.00.
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For the week, gold is up 3.5 per cent, its best performance since early February. Silver, meanwhile, went from strength to strength, reaching its highest price since January 2015 this morning.
Investors are flocking to the precious metal because of a much weaker dollar and the poor performance of stock markets. Gold is priced in dollars, so a weak dollar makes it a more attractive investment to non-US buyers. It is also seen as a 'safe haven' investment when stock markets are volatile.
The Bank of Japan's decision yesterday not to expand its monetary stimulus programme led to a downturn on the stock markets today, according to Reuters, giving gold a boost.
The US Federal Reserve's decision on Wednesday not to change interest rates – and its failure to spell out when it might raise them – has also pushed investors towards the precious metal, says Reuters.
Naeem Aslam of Ava Trade suggested the significant milestone of US$1,300 per ounce could be just around the corner. He said: "Investors' confidence is in jeopardy after the Bank of Japan's decision, and further fuel has been added by US corporate earnings.
"The FOMC [Fed] statement released earlier has not supported sentiment, and all these elements have added to one thing – risk-off trade. Hence we are experiencing this surge in the gold price. The next level of 1,300 is very much reality now."
According to the Wall Street Journal, one "cloud on the horizon" for the precious metal is the "weak demand landscape" in Asia. China's gold consumption fell 3.9 per cent year-over-year to 318.3 tons in the first quarter of this year, says the newspaper.
Gold price slips ahead of US Federal Reserve meeting.