Tuesday, 24 March 2015 20:11
LONDON: Gold steadied below a 2-1/2 week high on Tuesday, heading for its fifth session of gains on growing expectations that a U.S. interest rate increase could be pushed to September.
Spot gold climbed to its highest level since March 6 at $ 1,195.30 an ounce before easing to trade up 0.1 percent at $ 1,190.30 by 1455 GMT.
U.S. gold futures for April delivery rose 0.2 percent to $ 1,189.40 an ounce.
Prices were on course to post their longest winning streak since January last year, with investors favouring bullion over the past few days because of a slump in the dollar after the Federal Reserve’s cautious stance on the U.S. economy and diminishing likelihood of an early rate increase.
The metal, which does not pay any interest, had suffered from earlier speculation of higher U.S. rates as early as June.
The dollar – which had fallen initially – was up 0.2 percent against a basket of currencies, after U.S. data showed an uptick in underlying inflation pressures and gains in home prices.
“The dollar remains the main factor which is driving the gold price and traders will be looking very closely towards (Fed officials’) comments to gauge when and how rapid the rate hike will be,” online broker AvaTrade chief market analyst Naeem Aslam said.
Federal Reserve policymaker James Bullard said on Tuesday that a first rate hike “sometime in the summer” would still leave monetary policy extremely accommodative, and that market expectations should be better aligned with those of the Fed considering the current “boom time” for the U.S. economy.
But other Fed officials had cast doubt on the dollar’s appreciation going forward and raised speculation that any tightening of monetary policy could be pushed back.
The Fed is widely expected to begin raising interest rates this year, though the policy path remains uncertain, the central bank’s second-in-command said on Monday.
Some analysts warned that gold prices could face resistance on the way up.
“We seem to target $ 1,200 on the upside, which is a strong resistance level,” Mitsubishi Corp strategist Jonathan Butler said.
“But investors could still apply the strategy of selling the rally.”
Platinum was down 0.9 percent at $ 1,134.75 an ounce, while silver rose 0.1 percent to $ 16.92 an ounce and palladium lost 1.4 percent to $ 766.45 an ounce.
Copyright Reuters, 2015
