Spot Gold is trading higher for a fourth consecutive day in Europe Thursday as the euro continues to rise against the dollar and physical bullion demand holds firm. Market participants say the yellow metal continues to take its cues from other markets, primarily EUR/USD, which has climbed to its highest level since Jan. 5. Gold is priced in dollars and subsequently any weakening in the greenback’s value makes the metal cheaper for buyers using other currencies. Demand for physical metal continues to underpin gold’s gains. Buying demand from India in particular has held up well, despite an increase in import taxes.
Still, there remains caution among market players that prices could be due a pullback in the short term. Technical charts show strong resistance above current levels and the Lunar New Year next week should weigh on demand–particularly from China, which has been an active player in the market so far this month. In the longer run, market participants are more confident about gold’s prospects given the low interest rate environment and continuing macroeconomic and geopolitical concerns.
EasyForexNews Research Team