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Gold eyes worst week since March on dollar strength

Gold eyes worst week since March on dollar strength

MANILA: Gold edged higher on Friday after losing more than 1 percent the session before, but was on track for its biggest weekly decline since March as a firmer US dollar cut the metal’s appeal.

The dollar was up for a fourth week in five against a basket of major currencies, making dollar-denominated assets such as gold more costly for holders of other currencies.

The greenback got a boost overnight after Boston Federal Reserve President Eric Rosengren said the Fed should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter.

“Right now the dollar is the primary factor in the gold price,” said William Wong, assistant head of dealing at Wing Fung Precious Metals in Hong Kong.

Wong believes market opinions remain mixed on when the Fed will hike rates next after raising them for the first time in nearly a decade last December. The metal will likely be trapped between $1,250 and $1,300 before the Fed’s next meeting in June.

Spot gold was up 0.8 percent at $1,273.01 an ounce by 0721 GMT, after dropping 1.1 percent on Thursday. It has lost 1.2 percent so far for the week, the most since the week ended March 25.

Weaker Asian equities following a rocky performance on Wall Street supported gold on Friday.

Gold has gained 20 percent in 2016 after a series of weak economic data in the United States and elsewhere eased expectations of a near-term increase in US interest rates.

Reflecting sustained optimism towards bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, stood at 27.17 million ounces on Thursday, the highest since November 2013.

But Wong said physical gold demand in top consumer China remained scarce, possibly due to the high price. “Maybe towards $1,250 we might see a bit more physical demand,” he said.

US gold for June delivery rose 0.3 percent to $1,274.50 an ounce.

Technical analysts at ScotiaMocatta said their view on gold is neutral so long as it trades between the $1,303 resistance level and the $1,256 support.

Spot silver advanced 0.7 percent to $17.08 an ounce, platinum gained 0.9 percent to $1,053.85 and palladium climbed 0.5 percent to $595.71.

Copyright Reuters, 2016

Courtesy : BRecorder



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