Gold jumps to five-month highs as dollar dips

Gold prices rallied in European trade to five-month highs, resuming gains after a hiatus, as the dollar loses ground against a basket of major rivals. 

Dollar fell to six-month lows against major rivals following bearish remarks by Fed Chair Jerome Powell and as risk appetite improved as Chinese cities lessen Covid 19 restrictions. 

Prices Today

Gold prices rose 0.7% to $1,810 an ounce, the highest since July 5, after losing 0.3% on Friday, the first loss in three days after a stream of strong gains. 

Gold gained 2.4% last week, the second weekly profit in a row as the dollar weakened. 

The Greenback 

The dollar index fell 0.4% on Monday, deepening losses for the fourth straight session and plumbing six-month low at 104.11 against a basket of major rivals.

Fed Chair Jerome Powell struck a much more bearish chord in recent statements, noting the Fed will slow down its pace of policy tightening in upcoming meetings.

After such statements, chances of a 0.50% rate hike by the Fed rose from 67.5% to 80%, then 82% now, while chances of a 0.75% rate hike fell from 32.5% to 18% currently.

Chinese Developments

Chinese cities started easing Covid 19 restrictions this week, boosting confidence in the economy. 

China's economy was hammered recently by the strict zero tolerance policies which hampered trade and consumption, and led to rare protests. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.15 tones on Friday, the second decline in a row to a total of 905.49 tones, the lowest since November 18.