gold steadies after rate hike selloff
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
Arab Today, arab today

Gold steadies after rate hike sell-off

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Arab Today, arab today Gold steadies after rate hike sell-off

London - Arab Today

Gold inched higher on Friday as investors judged that a sell-off sparked by a rise in US interest rates this week had run its course and the dollar weakened, making bullion cheaper for holders of other currencies.
Spot gold was up 0.1 percent at $1,254.66 an ounce by 1411 GMT, having earlier hit $1,251.05, its lowest since May 24. US gold futures gained 0.1 percent to $1,256.4. Gold was on track for a second weekly loss and has fallen more than 3 percent from a high of $1,295.97 on June 6 as investors braced for the US Federal Reserve to raise interest rates and signal its policy outlook on Wednesday. Bullion is sensitive to higher interest rates because they push bond yields higher, increasing the opportunity cost of holding non-yielding gold, and tend to boost the dollar.
“Gold has been spooked by the hawkish tone from the Fed, which triggered some long liquidation both in futures and exchange-traded funds,” said Saxo Bank analyst Ole Hansen. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.5 percent to 27.4 million ounces in the week to Thursday. Fears of more rate increases this year were heightened on Thursday by strong US economic data, though housing numbers on Friday disappointed, pushing bond yields and the dollar lower.
Hansen said that a consistent run of strong data would be needed to give direction to the market. “Until we get that, gold will trade sideways with probably a slight negative bias,” he said. Commerzbank analysts wrote: “If the Fed were to follow a more aggressive approach, this could preclude any significant rise in gold prices for the rest of the year.”
Technical support for gold was around the 100-day moving average at $1,246-$1,250, Alex Thorndike, a trader at MKS PAMP, said in a note.
In other precious metals, silver was 0.3 down at $16.66 an ounce and heading for a weekly decline of about 2.9 percent, its biggest in six weeks. “Price action in both gold and silver of late seems to imply that traders still have plenty of short-term long positioning on their books,” said OANDA analyst Jeffrey Halley.
“It may leave both metals vulnerable to a further washout into the weekend.” Platinum gained 0.1 percent to $921 an ounce, having touched its lowest in more than a month on Thursday at $913.50. Palladium was down 0.8 percent at $862.75 and on track for its first weekly decline in four weeks.

Source: Arab News

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