Gold extends two-week gain

The yellow metal was trading near US$4,400 an ounce, after ending the previous week nearly 1 per cent higher

Gold extended a two-week advance on Monday as weaker US retail sales data weighed on the dollar, making bullion cheaper for most buyers.

The yellow metal was trading near US$4,400 an ounce, after ending the previous week nearly 1 per cent higher. Latest US data showed declines in both consumer sentiment and retail sales, helping to ease fears of an imminent rate hike, which is typically a headwind for non-yielding bullion.

A gauge of the US dollar was down by 0.2 per cent on Monday, making bullion that has priced in the currency cheaper. The yield curve – referring to the gap between the long-term and short-term US Treasury yields – was also steepening.

Still, volatility continued to shroud the international energy supply outlook, showing that the risk of monetary tightening has not gone away.

Gold’s recovery above the key US$4,000-an-ounce threshold in recent weeks has been driven by renewed investor appetite and an increase in central bank purchases, notably from China.

Gains in the week ended Aug 16 took the metal above its 100-day moving average for the first time since April, and it continues to hover near that level.

Bullion will require a meaningful break above US$4,400 to confirm that its positive momentum has further room to run, said Justin Lin, an analyst at Global X ETFs.

The recent bounce, while mostly driven by technicals, has also priced in most of the positive catalysts from the past week, so we may see gold trade relatively flat until the next clear catalyst, he added.