By Barani Krishnan
Investing.com - Gold rose slightly on Monday, demonstrating momentum that could return it to $2,000 an ounce and beyond, even as investors in the yellow metal booked their firstly monthly loss in six in August after untoward price swings.
The benchmark December gold futures on Comex settled up $3.70, or 0.2%, at $1,978.60 per ounce. But it wasn’t enough to save the month for gold bugs who lost about 0.4% net on their holdings for August after volatility that brought the yellow metal down from highs above $2,089 to lows of around $1,874.
Monday’s peak — $1,985.30 — suggested that gold futures are on track to recapturing their $2,000 perch.
As of now, there’s no certainty if the August volatility in gold will recur, or if the market will continue rising in a more steady fashion. Monday's session high in December futures was just about $30 short of the Aug. 19 peak of $2,015.60, although it remains more than $100 away from the Aug. 7 record high of $2,089.20.
Notwithstanding this month’s net drop, gold futures posted non-stop gains between March and July, rising $420 or 27%.
The spot price of gold, which reflects trades in bullion, was up $3.98, or 0.2%, at $1,968.37 by 2:20 PM ET (18:20 GMT). It peaked at $1,976.49 earlier. Technicals show that a hold above $1,970 will be crucial for spot gold to continue its ascent.
Monday’s rise in gold came as the dollar and U.S. bond yields slumped. The Dollar Index, which pits the greenback against six major currencies, fell back below the key 93-handle while the 10-Year Treasury note posted a loss of more than 4% on the day.
“The Dollar Index looks like to break key support of 91.80 this week,” said Sunil Kumar Dixit, a technical chartist on currencies and precious metals. “On comparative charts, such a breakdown should greatly help gold’s ascent toward $2,020 at least.”
Investors will also be looking out for two sets of U.S. jobs data this week that will decide the direction for markets.
Weekly jobless claims, due on Thursday, are expected to come in at 980,000 versus last week’s 1.006 million.
August non-farm payrolls, due on Friday, are expected to have grown by 1.4 million jobs, after a 1.76-million addition in July.
Should either data, particularly the monthly jobs number, come in weaker than expected, then gold could take off. Conversely, an upbeat performance by the data could pose headwinds for gold.
Investors will also get the chance to hear from two Fed officials on central bank’s new strategy that will keep interest rates near zero, even if inflation rises above its target, in order to bolster the recovery in the economy and the labor market.
Following Monday’s speech by Vice Chair Richard Clarida, Governor Lael Brainard while speak Tuesday and New York Fed President John Williams on Wednesday.
The speeches will be the last before the Fed enters its typical blackout period ahead its next policy meeting, scheduled for Sept. 15-16.