Gold price advances 2% before U.S. employment data

[Ben Graham]

Gold prices advanced more than 2% on Monday to trade above the $5,000-an-ounce level as buyers returned to the market after its epic crash last month.

Spot gold surged as much as 2.3% to $5,070 per ounce, its highest since the Jan. 29 selloff that saw prices crater by 12% in a single day.

Bullion has been holding between the $4,700-$4,900 range for the past few sessions, as the market continues to digest the aftershocks of what was the metal’s worst daily performance since the 1980s.

With Monday’s move back above $5,000, gold has now recovered around half of those losses from the historic fall, and remains up 14% on the year.

Live Gold Price Chart and Real-Time Updates

Gold’s ability to stabilize above the $5,000 threshold “will be critical in determining whether the market can transition from a reactive bounce to a more sustainable advance,” Ahmad Assiri, an analyst at Pepperstone Group, told Bloomberg.

Despite halting its record run, banks and asset managers including Deutsche Bank and Goldman Sachs still back the metal to recover due to long-term demand drivers, such as the wider diversification away from US assets, policy uncertainties and elevated central bank buying.

As a sign of strong demand, data over the weekend shows that the Chinese central bank extended its gold purchases for a 15th straight month, underscoring the global trend of reserve diversification seen in recent years.

Gold price poised for new records as buyers return to the fray

Looking ahead, US economic data due this week — in particular the January jobs data — are expected to offer more clarity on the US Federal Reserve’s policy direction. A decision to lower rates would bode well for non-yielding assets such as gold.

Silver up 7%

Silver, meanwhile, bounced 7% to over $83 an ounce, as it slowly recovers from its hard fall. The metal, which tends to move in tandem with gold but is much more volatile, fell by more than 35% during the January crash.

“Silver has entered a markedly higher-volatility regime,” Marc Loeffert, trader at Hereaus Precious Metals, wrote in a note on Monday. Retail dip buying has driven large ETF inflows into silver, he said, helping the white metal to reverse some of its rapid losses.

(With files from Bloomberg)