Gold SPDR Gold Trust (ETF) (NYSEARCA:GLD) prices in Asia rose in Tuesday trading, signaling investors cautious bet on the global economic outlook. The weaker U.S. Dollar is attracting interest in gold, one of the perceived safer stores of value. Uncertainty over the U.S. interest rate adjustment is seeing the dollar ease against certain major global currencies, thus making dollar-denominated commodities such as gold cheaper for foreign buyers.
Can gold rise to $3,000 per ounce?
In the gold market, U.S. gold futures for June deliveries added 0.03% to strike $1,258.40 per troy ounce. With central banks eager to keep loose monetary policies to support economic growth, some experts have claimed that gold prices could cross $3,000 in three years.
Gold prices have gained nearly 18% so far in 2016. Investor appetite for gold has increased amid turmoil in the global economy. U.S. economic data do not seem to suggest that the Fed will be move fast and aggressively to raise interest rates. In any case, the Fed chairman, Janet Yellen, has seemed to douse rate hike expectations. China’s economic data also don’t inspire much hope in the country’s stock as economic slowdown spreads to consumers spending.
In Europe, the troubled banking sector is driving investors to seek for cover in the so-called safe haven assets with gold being one of them.
Gold on Monday touched its highest price level in nearly three weeks and the Tuesday rally of bullion in Asian markets suggests the precious metal could hit the $1,300 price mark that has been elusive.
U.S. copper futures for May delivery jumped 0.05% to $2.084 per pound. But silver bucked the precious metal trend, with U.S. silver futures falling 0.29% to $15.930 per troy ounce.
Rates uncertainty hurting dollar but helping gold
As long as the Fed looks undecided on the right move with interest rates, analysts see the weaker dollar inspiring investors to buy more of gold, sending up the price of the yellow metal further. But gold prices could quickly lose momentum if the Fed moves to tighten fiscal policy by raising interest rates. Raising interest rates will make yield-bearing investments more attractive than gold.