However, experts said that strong equities may cap further surge in the gold prices. COMEX August gold futures are trading up $ 1.1 at $ 1259.4 per ounce. The solid gains in equities may cap the upside for metal.
Asian stock markets powered higher Monday, after China's decision over the weekend to allow greater flexibility in the Yuan's exchange rate. Japan's Nikkei Stock Average was up 1.5%, Australia's S&P/ASX 200 was 1.5% higher, South Korea's Kospi Composite rose 1.5% and New Zealand's NZX-50 added 0.6%.
Gold's alternative investment demand can be seen during the day as there will be some pressure on the dollar because of China's decision to make its currency more flexible. Overall firm commodities markets may also impart some gains in bullion prices.
Gold gained nearly 2.3% during the last week, eighth weekly gains in the last nine weeks. The dollar Index closed break-even with some movements during intra-day on Friday. The dollar index settled the week with more than 2% losses.
Gold futures climbed to a record high as more investors considered this yellow metal as a prospective investment to reap better returns amid uncertain economic conditions. Investors are afraid of stock markets or other riskier bets and thus, a big money is chasing gold.
Gold futures are trading marginally up at $1259.30/oz in Asia while the dollar has taken a dip of nearly 0.5% against the world's six major currencies. China's decision to ease the Yuan's de-facto peg against the US dollar helped commodities markets gain. Currencies of most of the Asian countries may also appreciate with stronger gains for equity markets as well. The Yuan policy shift is bullish for commodities that China imports while bearish for those it exports. Base metals and crude oil may be primary beneficiaries in the commodities' segment.