Gold prices bounced back and managed to stay buoyant on Monday as Asian stocks advanced while investors awaited key US inflation data due later this week that could influence the Federal Reserve's (Fed) monetary policy stance.
After trading at its all-time high of US$2,078 per ounce last week, the precious metal retreated later in the week after the US non-farm payrolls surprised to the upside. But prices edged higher on Monday after the dollar eased with spot gold staying above $2,020 in the afternoon. US gold futures also climbed 0.2% to $2,029.30.
Domestic gold prices were also up 150 baht as international prices rose $5 per ounce and the US dollar weakened, said Jitti Tangsithpakdi, president of the Gold Traders Association.
"Gold prices tend to be slightly volatile in the short term amid lingering concerns about the problems in the US banking industry," he told the Bangkok Post, adding that gold prices are projected to move around the $1,990-$2,025 mark in the near term.
Globally, investors await the release of US consumer price index (CPI) data which is due tomorrow, along with the producer price index (PPI) and consumer confidence during the week. Any signs of inflation being subdued would hinder the greenback due to lower interest rate expectations from the Fed, which experts say could see gold trend higher.
Traders are also keeping tabs on developments surrounding the US debt ceiling after Treasury Secretary Janet Yellen on Sunday issued a stark warning that failure by Congress to act on the debt ceiling could trigger a "constitutional crisis".
She said that if they fail to do so by early June, it could harm the federal government's creditworthiness. There are also concerns over the potential financial market consequences that could arise if the US government runs out of cash to pay its bills. If so, analysts forecast gold is likely to gain with prices moving up to $2,100.
At the same time, it's worth noting that China held 66.7 million fine troy ounces of gold at the end of April, up from 66.5 million ounces at the end of March. The value of China's gold reserves rose to $132.3 billion at the end of April from $131.6 billion at the end of March.
Meanwhile, the Stock Exchange of Thailand joined the rally of the region's bourses, with the SET index rising 1.89% to 1,562.25 points. Hong Kong's benchmark Hang Seng index rose 0.8%, while in China the CSI 300 index of Shanghai- and Shenzhen-listed shares climbed around 1%.