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Metals Stocks: Gold marks highest finish in over 4 months, breaks above 200-day moving average

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Gold finished higher Monday, with prices at their loftiest since January on the back of a weaker U.S. dollar and losses among many global benchmark stock indexes.

Gold received an “uplift on a slightly weaker [U.S. dollar], and with real yields turning more negative,” Ross Norman, chief executive officer at Metals Daily, told MarketWatch.

Prices for the precious metal gained more ground during Monday’s trading session after Federal Reserve Vice Chairman Richard Clarida said the U.S. economy hasn’t hit the benchmark of “substantial further progress” needed for the U.S. central bank to begin scaling back asset purchases. That helped put pressure on the U.S. dollar, supporting dollar-denominated prices of gold, with the ICE U.S. Dollar Index
DXY,
-0.16%

trading down 0.2% in Monday dealings.

June gold
GCM21,
+1.57%

GC00,
+1.57%

 rose $29.50, or 1.6%, to settle at $1,867.60 an ounce. Prices for the most-active contract settled at their highest since Jan. 7, and futures also closed above the long-term 200-day moving average for the first time since early in 2021. Analysts view moves above or below moving averages as a gauge of an assets bullish and bearish momentum.

Gold, which tallied a rise of 0.4% last week, marked their largest one day dollar and percentage gain since May 6.

“Technically, June gold futures bulls have the firm overall near-term technical advantage amid a seven-week-old price uptrend in place on the daily bar chart,” wrote Jim Wyckoff, senior analyst at Kitco, in a daily note.

The analysts said the next upside target for bullion is to “produce a close above solid resistance at $1,881.00, while support for gold sits at $1,800 on the downside.

Gold prices held solid gains after a reading of manufacturing activity in the New York area, the Empire State Manufacturing Index, slipped to 24.3 in May from a more-than-three-year-high of 26.3 in April, the New York Fed said Monday.

The new orders index rose 2 points to 28.9 in May, while shipments rose 4.7 points to 29.7.

“Gold investors welcome an unbalanced global economic recovery as that supports easy-money policies to last a lot longer,” said Edward Moya, senior market analyst at Oanda, in a market update. “China’s economic rebound is easing and that should drive Beijing to keep its accommodative fiscal and monetary policies in place for longer. ”

Bullion could extend gains, he said, “if the 10-year Treasury yield remains stuck in the mid-1.60% area.” However, the biggest risk for gold right now seems to be a stronger dollar, which could emerge if restrictions in Asia become widespread, he said. 

The rise for precious metals on Monday came as major U.S. stock indexes traded broadly lower to start the week following a period that has been marked by rising concerns about inflation.

Meanwhile, July silver
SIN21,
+3.51%

rose 91 cents, or 3.3% to end at $28.27 an ounce, after putting in a 0.4%. weekly loss on Friday. Prices settled at their highest since February.

Other metals traded on Comex moved up as well on Monday.

July copper
HGN21,
+1.41%

added 1.2% to $4.71 an ounce. July platinum
PLN21,
+1.94%

rose 1.8% to $1,244.50 an ounce and June palladium
PAM21,
+0.13%

edged up by less than 0.1% to $2,895.90 an ounce.

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