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Monday, October 3, 2022

Gold set to snap 5-week losing streak

NEW YORK: Gold bounced toward its first weekly gain in six weeks on Friday as a pullback in US Treasury yields and the dollar’s overall decline bolstered non-yielding bullion’s safe-haven appeal as economic risks persisted.

Spot gold was up 0.7% at $1,730.42 per ounce by 11:59 a.m. EDT (1559 GMT). It was on course for an over 1% weekly rise, following a strong rebound from more than a one-year low of $1,680.25 on Thursday.

US gold futures rose 0.9% to $1,728.70.

The rebound was helped by a retreat in US 10-year Treasury yields.

Boosting gold’s allure for overseas buyers, the dollar index, also a rival safe haven, headed for its first weekly fall in four weeks as disappointing US data dampened expectations of a large 100-basis-point (bps) interest rate hike by the Federal Reserve at its July 26-27 policy meeting.

The lower dollar, declining growth stocks and the dip in yields are all helping gold, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

While the Fed meeting is likely to be a “high-volatility event” for gold, there may not be many steep hikes after the one next week, Streible added.

Rising US interest rates increase the opportunity cost of holding non-yielding bullion.

“Assuming the Fed hikes by 75 bps in July, we believe the bulk of the near-term downside risk has been priced in; but the longer-term trend is still to the downside,” Standard Chartered analyst Suki Cooper said in a note.

But gold could also find support from a price-responsive physical market and if recession risks deepen, Cooper added.

In the physical markets, demand picked up in some Asian hubs this week as softer prices drew buyers, allowing dealers in India to narrow discounts.

Spot silver fell 0.5% at $18.74 per ounce while platinum rose 0.8% to $878.53.

Palladium rose 6.9% to $2,023.90.

Gold set to snap 5-week losing streak

Source: Brecorder

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