Gold prices rise higher as Dollar Weakens

Published on: 06 Mar, 2018

Gold prices were traded higher on Monday due to a weak U.S. dollar.

Spot gold rose 1.36 percent to $1,338.01 an ounce during Tuesday’s trading session, while U.S. gold futures for April delivery gained 1.33 percent to $1,333.50.

DXY US dollar Currency Index, which measures the greenback against a basket of major currencies, was down 0.62 percent at 89.52.

Gold price is sensitive to the U.S. dollar as a weaker dollar makes other currencies holders cheaper to buy dollar-denominated commodities.

"As a result of the weaker dollar, gold - together with oil and industrial metals - has benefited from the North Korean news," said Saxo Bank's Ole Hansen, according to Reuters. "This (is) despite the potential for lowering the geopolitical risk should we move towards a denuclearised Korean peninsular.”

Worries over a potential trade war between the U.S. and the other countries also help increased the demand of the yellow metal. Trump administration announced the plan to impose 10 percent tariffs on aluminum imports and 25 percent on steel imports last week.

"In the near term, given the unpredictable nature of current market sentiment, investors will continue to buy gold on dips to hedge the growing tail risk from Trump's controversial policies," said Stephen Innes, APAC trading head at OANDA.

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Marco Zhou

Email: Marco@financialinsiders.com

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