Gold jumped back in early trade today (Monday 10 October), following its worst week since June when it lost value in eight consecutive trading session.
Today at 07:45, the precious metal was selling for £1,021.49 per troy ounce, after falling to a low of £989.37 last week.
Analysts said the price was lifted by Chinese buyers returning to the market after the holidays, a weaker dollar and expectations in the market that further increases in interest rates in the US this year will be gradual.
Richard Xu, of Chinese gold exchange traded fund HuaAn Gold, told Reuters: “Gold prices are quite appealing after the recent correction. In China, what we see today (after a week-long holiday) is that there is some demand to buy gold following its dip.”
The improved prices came after last week’s big jump in the price of the US dollar, which hit its highest levels since the end of last year. When the dollar rises in value, gold tends to lose value and vice versa.
The dollar was up after strong statistics on US manufacturing and employment, which suggested that the cost of borrowing would be increased before the end of the year. Higher interest rates increase the cost of holding gold, which is a non-yielding commodity.
However, a crash in the value of the pound at the end of last week, which dipped to its lowest level in three decades as traders worried that the UK will go for a ‘hard Brexit’ from the EU, helped to restore some value to the precious metal.
Investors will be watching the markets, and world events, closely this week to see what direction gold will take. If you’re looking to begin a gold investment, there may be the opportunity to get in at a slightly lower price than has been the norm for much of the year.
