Gold rises to 2-week high

Gold rose to its highest in two weeks as political turmoil and weak economic data in the US reduced expectations of aggressive interest rate rises this year, pushed down US bond yields and drove the dollar to its lowest in six months.
Lower yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar makes bullion cheaper for non-US investors. Higher interest rates would push yields up and likely boost the dollar.
Spot gold rose for the fifth day and was up 1.8 percent at $1,258.38 an ounce at 1414 GMT, after hitting $1,259 an ounce, the highest since May 1. It is on track for its biggest rise since June last year.
US gold futures were 1.7 percent higher at $1,257.80 an ounce. “Downward movement in yields and the dollar have given support to gold,” ABN AMRO analyst Georgette Boele said. “And on top of this, you get political uncertainty which is denting the dollar.”
An unexpected fall in US homebuilding, meanwhile, added to a run of weak economic data, raising new doubts about how many times the Federal Reserve will raise interest rates this year.
Futures traders are pricing in a 66 percent chance of a June rate rise, down from around 90 percent earlier this month, according to CME’s FedWatch Tool. On the technical side, gold broke above resistance at its 200-day moving average and Fibonacci retracement, both at around $1,245, triggering technical buying.
If gold can hold above that level it could rise to its long-term downtrend line at $1,287 an ounce, said technical analysts at Commerzbank. Gold imports to major consumer India will, however, drop back sharply later in the year following a strong first quarter, the World Gold Council said on Wednesday.

Source: Arab News