After its drop last Friday, gold rose on Monday ahead of the critical policy meetings to be conducted this week by major central banks, which can affect the movements of the precious yellow metal.
This precious yellow metal hit its high of $1,257.17 per ounce; while currently lower around $1,255.02. It dropped sharply last Friday after having a 13-month rally high of $1,283.17, as investors placed their bets on equities.
The U.S. benchmark Standard & Poor’s 500 index increased by 1.64 percent on Friday, finishing at about 2,022.19 — which is the highest level recorded for this year.
The European Central Bank
The European Central Bank (ECB) shocked markets by implementing zero interest rates. They also announced that they will be expanding the asset purchases program of the central bank in addition to several other measures. These “other” measures gave more support to the equities of ECB; thereby causing the gold to lock their weekly loss last week.
The U.S. Dollar
Meanwhile, the USD traded a little bit higher today at about 96.35 based on the dollar index, after recording the two-week loss last week.
Investors may be paying more particular attention to the policy meeting next week by the Federal Reserve, amidst the expectations that policymakers will not be implementing hike rates in the near future.
Another two-day policy meeting will also be conducted by the Bank of Japan (BOJ). This event may also catch the attention of investors because there might be a probability that policymakers will exempt $90 billion in the short-term funds from the newly implemented negative interest rates, according to several experts and analysts that are quite familiar with the case.
While the physical demand for top Asian buyers, such as China and India, was weak in the recent week; the gold metal has gained about 18% this year.