Gold climbs above $5050 to one of the best ranges of the day

Gold has broken above the earlier session range and is trading up 2% to $5058. Silver is up 5.7% to $82.46 and also at the best levels of the day.

Risk appetite is picking up again in broader markets and the S&P 500 is up 31 points or 0.46%. That’s a nice turnaround after it opened lower. Nvidia is leading the way as it completely recoups last week’s decline.

For gold, political intrigue is certainly helping. A Labour MP is calling for UK PM Starmer to resign today and in Japan, PM Takaichi won a supermajority in the weekend election. That could pave the way to further spending.

For the US, a Bloomberg report said Chinese financials were told by regulators to trim Treasury exposure. That was framed as a move to limit concentration risk but you have to imagine there is more to it than that.

We didn’t get any news on Iran or strikes on the weekend and reviews from Friday’s talks were mixed, with one saying Iran had refused to stop enriching uranium. Expect US-Iran relations to remain in the headlines for weeks.

Ultimately though, gold and silver are momentum trades and they’re trying to re-establish the upside. For gold, it will need to get above $5100 or at least $5092, which was the Feb 4 high.

Looking with a wider lens, it will be a tall mountain to climb to get back to the spike high just below $5600 but it’s all about the range right now. The range of the past two weeks was $4400-$5600 and we’re not into a consolidation period. If it can consolide in the top end of that range, it’s very bullish and vice versa.

A big event this week is the non-farm payrolls report on Wednesday. A soft reading would increase the odds of more rate cuts this year and further US dollar devaluation. The dollar is the worst performing G10 currency today.