Gold carried to record high on wave of momentum with focus on US rates
By Polina Devitt and Ashitha Shivaprasad
LONDON (Reuters) — Gold hit a record high on Tuesday, with growing expectation of U.S. monetary easing and continued geopolitical risk buoying activity from momentum-driven funds which could propel the precious metal further.
A wider robust fundamental backdrop added support, including strong physical demand in Asia and central bank purchases as well as bullion's traditional safe-haven cachet. Central banks have been net buyers of gold for eight consecutive months.
Spot gold rose 0.8% to $2,130.79 per troy ounce as of 1540 GMT, after touching its record high of $2,141.59.
«The move became self-fulfilling with stops triggered and then of course that brings in the momentum funds,» said StoneX analyst Rhona O'Connell.
From a technical analysis perspective, gold may still have further upside towards $2,180, a Fibonacci projection level.
«The coming days, especially with the critical economic data releases and (Federal Reserve Chair Jerome) Powell's testimonies, will be crucial in determining whether gold can maintain its current trajectory or if we'll see a period of consolidation,» said Alexander Zumpfe, senior precious metals trader at Heraeus.
Independent analyst Ross Norman expects gold to hit $2,300 this year: «It's clear that the Fed will certainly cut rates and you'll start to see the market move towards those numbers. Will it happen in next few weeks? Maybe not. But it will probably happen in the next six-month window.»
Holdings in gold-backed exchange-traded funds (ETF), other major part of gold demand, continue to slide for now. The world's largest gold-backed ETF — SPDR Gold Trust (P:GLD)'s GLD (NYSE:GLD) holdings — dropped 7% so far this year. [GOL/ETF]
Spot silver has
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