Gold Surges on Weaker Dollar as Buy-the-Dip Setup Takes Shape
Gold prices surged to $4,068.54 an ounce on Monday as the dollar weakened and oil prices fell.
The weaker dollar made gold cheaper for buyers using foreign currencies, according to Tim Waterer, chief market analyst at KCM Trade, who described the move as an 'upbeat but guarded start'. Gold pays no interest and usually struggles when investors expect real yields to remain high.
The recovery is seen by some as a rare buy-the-dip setup, although the metal needs further weakness in the dollar and Treasury yields before Monday's advance can be treated as a durable bottom.
Aakash Doshi, head of gold strategy at State Street Investment Management, believes that expectations for Fed tightening are overly aggressive and predicts that gold could reach $4,500 to $4,750 by year-end if changing rate expectations pull the two-year Treasury yield below 4%.