The gold market started the week climbing for the first time in three sessions. Gold futures for June delivery jumped $14, or 1.6 percent, to $902.20 an ounce showing the biggest gain since April 23. weaker dollar fueled demand for a store of value as an alternative investment as investors prepared for the release later this week of U.S. bank stress tests. Today Gold climbed for a second day, climbing $2.10, or 0.2 percent, to $904.30 an ounce. Earlier, the metal reached $916.70, the highest since April 27, but struggled to hold onto the gains, as early strength in the market was chipped away throughout the session by the solid recovery in the Dollar. The gold market was initially supported by a push lower in the Dollar and some flight to safety buying but as the Dollar strengthened and the Euro lost ground ahead of the ECB’s rate decision this week, gold also gave up gains and was eventually pushed lower on the session.
This week’s ECB interest-rate decision and U.S. bank stress tests results will dominate the action in the gold price. The tests may signal whether 19 top financial firms need more capital to withstand economic disruptions. The Federal Reserve plans to make the data public on May 7, the same day as a possible interest-rate move by the European Central Bank. The ECB is expected to lower its main refinancing rate by a quarter of a percentage point, or 25 basis points, to 1 percent. As markets enjoyed a massive bullish rally in the last few weeks the market is expecting a substantial evidence of recovery to back the positive sentiment and refuel the bullish trend. Thus unexpected negative data could shake the positive sentiment and consequently spark the lurking profit taking Dollar strength and gold weakness.
Gold Overview
