Gold had another solid day in trading yesterday, up almost 1.6%
Gold remains one of the more "normal" trades this year - following seasonal patterns rather well. It has always been a case that gold tends to strengthen ahead of the Chinese Lunar New Year, and this year seems no different.
The recent run up sees gold close in on last September's high and it looks poised to head for a retest of the 2018 highs at $1,366.15.
But as much as the buying in gold has been, the rally has also been fueled by the dollar's weakness since December - and much less so to do with risk aversion. Comparing the trade in gold against the euro on the other hand, the rise hasn't been as stark:
It's not an exact confirmation that gold hasn't strengthened - it has - but the jump that we're seeing against the greenback has much to do with the dollar's recent decline as well.
The real test for gold now comes as the seasonal trade fades away. But as long as inflation expectations continue to be anchored and/or even rise higher, there's still room to the upside for gold.
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