Gold prices pop higher as Buffett picks up shares of world’s second-largest miner

Does Warren Buffett’s purchase of Barrick Gold burnish bullion?

Gold prices on Monday headed higher, bolstered partly by a slide in government bond yields and the U.S. dollar, which were raising the appeal of the precious commodity.

But the yellow metal also may have drawn additional interest after a public filing that offered a peek of holdings of Warren Buffett’s Berkshire Hathaway Inc. BRK.A, -0.84% BRK.B, -0.98% revealed that the conglomerate had taken a new stake last quarter in the world’s second-largest gold miner, Barrick Gold Corp. BLK, 0.81%

Last week, gold came under pressure as U.S. Treasurys climbed to an eight -week high, detracting from the appeal of bullion. However, gold enthusiasts insists that uncertainty about the economic landscape fostered by the COVID-19 pandemic make bullion a solid long-term bet, particularly as countries spend trillions to support their economies.

On Monday, Treasury yields were slipping, with the 10-year Treasury note rate TMUBMUSD10Y, 0.688% at 0.69% and a gauge of the U.S. dollar against a half-dozen currencies, the ICE U.S. Dollar Index DXY, -0.28%, off 0.1%. Gold benefits from lower yields because it doesn’t offer a coupon and a weaker dollar can make bullion more attractive to users of other currencies.

Some experts view gold and silver’s recent pullback from a recent powerful uptrend as consolidation ahead of its next phase. Gold suffered a sharp pullback on Tuesday that helped to snap a weekly win streak.

“We will have a new bullish signal with a clear surpass of $1,965, in a scenario that remains dominated by coronavirus news and fears of further lockdowns,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a note. “Expectations for further actions by central banks remain ever present and this is another supportive element for gold. A fresh decline below the support zone of $1,920-$1,930 would denote weakness.”

Indeed, the People’s Bank of China on Monday injected fresh liquidity into its financial system while it kept the rate steady at 2.95% on a one-year medium term lending facility $100.74 billion while it deals with the effects of the viral outbreak, Reuters reported.

December gold GCZ20, 2.00% GC00, 2.00% rose $14.10, or 0.7%, to $1.963.90 an ounce after the metal on Friday notched a weekly decline of about 3.9%, highlighted last Tuesday by the biggest daily dollar decline since April 15, 2013.

Meanwhile, September silver prices SIU20, 5.18% rose 94 cents, or 3.6%, at $27.030 an ounce following a 5.3% weekly loss.

By Mark DeCambre

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