Gold prices dropped back from record highs early on Monday. Traders look to be taking a breather after a huge rally.
Gold
was trading at around $2,086 an ounce, having reached an all-time high of $2,152.30 overnight.
The precious metal’s increase has been driven by lower bond yields, meaning less competition for gold, which produces no income.
“With softening Treasury yields, the opportunity cost of holding the non-yielding metal is decreasing, with demand and prices moving in the opposite direction,” wrote ActivTrades analyst Ricardo Evangelista.
Reports of attacks on shipping in the Red Sea over the weekend look to have contributed to greater risk aversion and contributed to safe-haven demand. However, some analysts are skeptical that can gold can keep setting new highs.
“An economic environment of no recession and above-average interest rates will prevent safe-haven seekers from returning to the gold market for the foreseeable future,” wrote Julius Baer analyst Carsten Menke in a research note. “We believe the gold market has moved ahead of itself and thus advise against chasing the rally.”
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