Gold & Silver

Gold stays above 2-week low; investors await US rates steer

Reuters | Updated on January 17, 2018

gold

Gold edged higher on Tuesday as markets shifted focus from hawkish comments by a Federal Reserve official at the weekend to a meeting of global central bankers this week, awaiting further guidance on US interest rates.

Spot gold rose 0.1 per cent to $1,339.86 an ounce by 0915 GMT, having hit a two-week low of $1,331.35 in the previous session. US gold was flat at $1,343.

Prices fell on Monday after weekend comments by the Fed's No.2 policymaker, Stanley Fischer, saying that the central bank is close to hitting targets for full employment and 2 per cent inflation, raising the prospect of a US rate increase.

“The gold markets took Fischer’s hawkish comments in its stride, there has not been much of a sell-off. The market is going sideways and in the context of those remarks that’s a good reaction,” said Standard Bank analyst Tom Kendall.

US Federal Reserve Chair Janet Yellen may provide more clarity on interest rates at a speech during an annual meeting of central bankers in Jackson Hole, Wyoming, starting August 25.

The Fed had last week sent mixed messages in the minutes of its July meeting, though some members have suggested that rates could rise as soon as September.

“The market’s attention remains firmly focused on Friday’s Jackson Hole speech from Yellen,,” MKS PAMP Group said in a note.

The Fed had increased rates for the first time in a decade in December, but expectations that it would hold off on further increases have helped to drive a 26 per cent gain in gold prices this year.

Gold is highly sensitive to rising rates, which boost the opportunity cost of holding non-yielding bullion while lifting the dollar, in which it is priced.

The dollar fell 0.13 per cent against a basket of major currencies, helping to underpin gold.

“Broadly speaking there is still a supportive environment for gold because the dollar index is increasingly breaking lower,” Standard Banks’s Kendall said.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.25 per cent to 958.37 tonnes on Monday.

Spot silver was up 0.9 per cent at $19.04 an ounce, having fallen by more than 2 per cent to its lowest in more than seven weeks on Monday.

Platinum edged 0.7 per cent higher to $1,104.40, while palladium gained 0.6 per cent to $694.15.

Published on August 23, 2016

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