9.8 C
New York
Tuesday, December 7, 2021

Gold edges up, set to snap 7-week losing streak

Gold edges up, set to snap 7-week losing streakLONDON: Gold edged up on Friday as the dollar softened and investors weighed the impact of China’s currency intervention on the timing for the first US interest rate increase in nearly a decade.

Bullion was set to end a seven-week losing streak after China’s yuan devaluation earlier this week increased uncertainty over the global economy, and pushed investors into assets perceived as safer such as gold.

“The market was caught by surprise by the Chinese currency devaluation and there was some safe-haven buying but physical demand is still not strong and only a test of the $ 1,110 could change that,” MKS SA head of trading Afshin Nabavi said. Spot gold was up 0.3 percent at $ 1,118.21 an ounce by 1348 GMT after hitting $ 1,126.31 on Thursday, its highest since July 20.

Thursday’s drop ended gold’s five-day rise, its longest rally since May. US gold for December delivery was up 0.2 percent at $ 1,117.90 an ounce. “The PBOC (People’s Bank of China) participating in this devaluation war was seen as positive for gold,” Commerzbank analyst Eugen Weinberg said.

“People’s perception that this devaluation could impact the timing of the rate hike in the US, therefore pushing the dollar lower, is also seen as a gold-supportive factor.” Volatile markets were soothed as the yuan steadied after China’s central bank said there was no reason for the currency to fall further given the country’s strong economic fundamentals.

“A further decline in volatility may reverse some of bullion’s recent ‘safe-haven’ inspired gains,” said HSBC in a note. Still, the precious metal has gained nearly 2 percent in the week so far, after a seven-week slide that was its longest retreat since 1999. As fears eased that China was looking at depreciating its currency further, a pick up in US producer prices in July on Friday renewed expectations that the Federal Reserve could raise interest rates soon.

Asian buyers of physical gold were sidelined this week as prices recovered, steadying premiums in top consumers China and India.

China’s gold reserves rose to 53.93 million ounces by the end of July, up from 53.32 million at end-June, the central bank said on Friday. The data was released following a June adjustment that was the first in more than six years.

China’s gold demand this year is expected to at least hold steady with last year at just under 1,000 tonnes and will not likely be dented by the currency devaluation, the World Gold Council said. Spot palladium rose 0.3 percent to $ 619 an ounce after touching a two-week high on Thursday. Platinum was up 0.4 percent at $ 996.25 an ounce and silver gained 0.5 percent to $ 15.48.

Copyright Reuters, 2015

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

10,930FansLike
12,893FollowersFollow
752FollowersFollow
- Advertisement -

Latest Articles

Popular Articles