Bullion prices were supported on Monday after disappointing US employment data unveiled late last week, reduced the likelihood of additional actions to tighten interest rates quicker. Higher interest rates in the world’s largest economy are negative for gold as it increases the opportunities for savers looking for stable returns on investment after years of near-zero interest rates. Of late, gold has been trading with a very high degree of correlation with US bonds as inflation remains subdued and economic data continues to underwhelm.
With the tense geopolitical backdrop also impacting risk sentiment, gold is extending its rally, and was last seen just below $1290 per troy ounce. Strong resistance likely sits between $1295 and $1305 and in the event of a break above this level, prices could soar all the way to $1340 per ounce.