Gold Reaches Two-Week High on Technical Level, Lower Bond Yields

(Bloomberg) -- Gold extended its rally to the highest in more than two weeks, drawing support from technical levels and declining real yields.

The metal closed above its 100-day moving average on Monday and reclaimed the psychologically important level of $1,800 an ounce. Prices have risen more than 3% from a two-month low in June as a drop-off in inflation-adjusted Treasury yields burnishes the appeal of the non-interest-bearing metal.

You “probably have some short-covering along with some technical buying all helping to contribute to a higher gold price this morning,” said Joseph Stefans, head trader at MKS (Switzerland) SA.

Investors are awaiting Federal Reserve meeting minutes due Wednesday for more clues on the monetary-policy path. Gold slid the most in four years last month as the Fed signaled it may tighten policy sooner than expected.

“We believe there is still mettle in the precious metals, as inflation should prove transitory, which implies that market pricing for Fed policy is too hawkish,” TD Securities analysts led by Bart Melek said in a note.

Spot gold gained 9% to $1,807.35 an ounce by 10:34 a.m. in New York, rising for a fifth day in the longest rally since May 21. Silver and platinum slipped, while palladium was little changed.

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