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Gold Pushes through $1,300 as Dollar Suffers Anew

Gold gained for a sixth straight session on Monday, pushing through the psychologically significant $1,300-an-ounce line, as the dollar remained depressed against chief rivals.

Precious metals on Friday posted their highest settlements since January 2015, as a slump in the greenback to its lowest level in about 11 months coaxed investors toward dollar-denominated commodities, including gold and silver. The Bank of Japan sent shock waves through financial markets late last week with monetary policy inaction that sent the yen lunging to an 18-month high against its U.S. counterpart. Some economists had thought the BOJ might further ease conditions in an effort to boost inflation.

Gold bulls have largely pinned the metals rally on negative real interest rates in much of the world. Michael Armbruster, principal with Altavest, said gold at $1,400 an ounce in the next month would not surprise him.

Early Monday, June gold GCM6, +0.26% gained $12.00, or 0.9%, to $1,302.50 an ounce and earlier touched $1,304. The SPDR Gold Trust GLD, -0.01% was up 0.4% early Monday.

Gold futures prices gained more than 4% in April based on the most-active contracts, according to FactSet data.

The dollar was steady near 106.63 yen as the U.S. session neared, having fallen to an 18-month low of 106.14 yen overnight. The euro traded around a 6½-month high, with one euro fetching $1.1484. The ICE U.S. Dollar Index a measure of the buck’s strength against a basket of six rival currencies, was down 0.2% and tapped its lowest levels in about 11 months.

July silver gained 9 cents, or 0.5%, to $17.91 an ounce. In April, prices surged 15% higher, based on the most-active contracts, according to FactSet.

Some analysts think gold could be due for at least a short-term correction given its quick, uninterrupted run.

“Even though net long positions in gold were reduced slightly in the week to April 26, we believe that speculative financial investors have been driving the gold price up significantly of late,” Commerzbank analysts said in a note. “The same also applies to silver, platinum, and palladium.”

For instance, net long positions in silver expanded again to a record 71,200 contracts, while net long positions in platinum are at their highest level since early November after soaring by 20%.

“As with many other commodities, we consider the rally of precious metal prices to be exaggerated and believe that correction potential has built up here,” the Commerzbank team said.

In other metals trading Monday, platinum for July climbed $3.60, or 0.4% to $1,082.40 an ounce, trading more than 10% higher for the month. Palladium for June rose $1.60, or 0.3%, to $626.05 and ounce, up over 11% for the month.

Copper for July was steady near $2.284 a pound, advancing just over 4% for April.

This story originally appeared on MarketWatch by Rachel Koning Beals on May 2, 2016. View article here.


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