Tuesday, 08 September 2015 17:40
LONDON: Gold firmed on Tuesday as a retreat in the dollar index helped the metal snap a four-day losing streak, but remained close to 2-1/2 week lows as uncertainty over a looming U.S interest rate hike persisted.
Spot gold was up 0.1 percent at $ 1,120.20 an ounce at 1100 GMT, while US gold futures for December delivery were down $ 1.90 an ounce at $ 1,119.50.
Spot prices hit their lowest since mid-August at $ 1,116.20 an ounce last week as hotly anticipated US payrolls data gave little direction on the timing of the Federal Reserve’s first interest rate hike in nearly a decade. Expectations for rising rates, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar, have knocked the metal 5 percent lower this year and remain gold’s biggest driver, analysts said.
Trade is expected to be rangebound ahead of the Fed’s next policy meeting on Sept. 16 and 17.
“The markets are split on whether they believe the Fed will hike rates or not, so investors are staying on the sidelines and waiting for price direction,” Capital Economics analyst Simona Gambarini said.
“That will occur when the Fed decides on the 17th whether it is hiking rates or not.”
“We as a research house are 50:50 on whether it will do so.
We were expecting a rate hike in September, but after the latest numbers, we’re not as sure as before.” Shares rose in Europe and Asia while the dollar lost ground against a currency basket after trade data from China and Germany highlighted the divergent outlooks of the two heavyweight economies.
Gold has failed to find a strong safe-haven bid despite the recent weakness in stocks due to worries over the Chinese economy, showing that the metal is struggling to find direction outside US monetary policy. Silver was up 0.7 percent at $ 14.65 an ounce, while platinum was up 1.2 percent at $ 995.20 an ounce and palladium up 2 percent at $ 586.60 an ounce.
The platinum market deficit shrank in the second quarter, data from the World Platinum Investment Council showed on Tuesday, as rising mine supply and autocatalyst and jewellery recycling outstripped a much smaller increase in demand.
“Whilst the estimate for the deficit for full-year 2015 was increased, we note that the price of the metal remains weak, and the weakening (South African rand) is providing producers with relief,” Investec said in a note.
“We do not see a material recovery in the metal until the industry is able to fundamentally restructure.”
