Friday, 20 March 2015 01:39
NEW YORK/LONDON: Gold pared gains Thursday from a two-week high, clinging to short-covering gains despite the US dollar’s recovery after a more cautious than expected interest rate statement from the US Federal Reserve.
Spot gold hit a peak of $ 1,177.46 an ounce earlier in the session as the dollar tumbled after the US Federal Reserve signalled a slower pace of interest rate hikes and gave a cautious outlook for the US economy.
Gold pulled back as the dollar rose from an early low to rise against a currency basket.
The currency extended gains after jobless data indicated the American labour market remained on a solid footing despite slowing economic growth. “A higher US dollar will be a major negative driver for precious metals going forward,” ABN Amro analyst Georgette Boele said.
Spot gold was up 0.2 percent at $ 1,169.26 an ounce at 2:49 p.m. EST (1849 GMT) and US gold futures for April delivery closed up $ 17.70 an ounce at $ 1,169.00 despite the greenback’s recovery.
“The market had gotten pretty short in the run-up to the Fed statements,” said HSBC analyst James Steel.
While the US central bank removed a reference to being “patient” on rates from its policy statement, it sounded a cautious note on the economic recovery.
It also cut its median estimate for the federal funds rate and expressed concern over the strength of the dollar.
Gold hit a four-month low this week on expectations that higher interest rates could lift the opportunity cost of holding non-yielding bullion.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.24 percent to 749.77 tonnes on Wednesday – the first inflow since Feb. 20.
China’s central bank on Thursday detailed plans on granting more licences for gold imports and exports, while maintaining that it could impose trade restrictions when necessary.
Further opening up of the world’s second biggest bullion market would support demand.
Silver was up 1.2 percent at $ 16.09 an ounce after touching a two-week high of $ 16.18, while spot platinum was up 0.3 percent at $ 1,117.50 an ounce and spot palladium was down 2.1 percent at $ 764 an ounce.
Russia’s central bank has agreed “in principal” to sell some of its palladium stock to a fund of investors led by Russia’s Norilsk Nickel and two co-owners, Norilsk’s Chief Executive Vladimir Potanin said.
Copyright Reuters, 2015
