3.8 C
New York
Tuesday, November 30, 2021

Gold firms after 4-day slide, but US rate hike view weighs

Gold firms after 4-day slide, but US rate hike view weighsSINGAPORE: Gold firmed after a four-day decline on Tuesday but languished near a four-week low as investors dumped the metal on expectations the Federal Reserve would hike US rates this year.

The Fed last week firmly put a December rate rise in play, hurting earlier views that the increase in nearly a decade could be pushed to next year on global growth concerns.

Spot gold ticked up 0.3 percent to $ 1,137.05 an ounce by 0647 GMT, but not too far from a four-week low of $ 1,132.35 reached in the previous session. The metal slid for a fourth consecutive session on Monday.

“We remain negative on the overall precious group over the short-term … The combination of a stronger dollar, soaring US equity markets, ETF liquidation, a jittery Fed, along with a worsening technical picture will all combine to keep the complex on the defensive for a little while longer,” said INTL FCStone analyst Edward Meir.

As a non-interest-paying asset, gold demand could take a hit from higher rates, while a stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

US economic data on Monday was supportive of a rate hike this year. Manufacturing activity in October hit a 2-1/2-year low, but a rise in new orders offered hope the United States might have seen its worst.

Other data showed construction spending rose in September to the highest in 7-1/2 years, indicating the economy remained on firmer ground despite signs of consumer spending cooling.

Investor outflows from exchange traded funds have increased.

Holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.43 percent to 689.28 tonnes on Monday, the lowest in three weeks. The fund hasn’t seen any inflow since Oct. 19.

Speculators have trimmed bullish bets on gold from an 8-1/2-month high, data last week showed.

Charts point to further price declines, according to analysts.

The next support for gold comes in at $ 1,121, ScotiaMocatta analysts said in a note.

While gold holds below $ 1,156, there is a risk of a deeper correction to the October-low near $ 1,105, they said.

Copyright Reuters, 2015

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

10,921FansLike
12,893FollowersFollow
751FollowersFollow
- Advertisement -

Latest Articles

Popular Articles