Global gold prices rise on dollar weakness, pause in stocks rally
Gold prices rose for a second day on Thursday, extending the gains in the previous session when prices climbed to the highest since September, as dollar weakness and a flagging rally in equities enticed investors to buy the yellow metal.
Spot gold was up 0.2% at $1,318.98 an ounce by 8.12am. Prices rose to as high as $1,326.56 an ounce on Wednesday, the most since 15 September. US gold futures were little changed at $1,319.10 an ounce.
Gold prices on Wednesday rose over 1% as the dollar swooned after a report that Chinese officials had recommended slowing or halting purchases of US Treasury securities.
Officials reviewing China’s foreign-exchange holdings have recommended slowing or halting purchases of US Treasuries, Bloomberg News reported on Wednesday, citing people familiar with the matter.
The US dollar fell to its lowest since November against the Japanese yen and weakened against a basket of major currencies on Wednesday after the report. It fell 0.1% to 92.29 on Thursday.
“Rising oil prices and strong global growth suggest gold will remain supported as investors look for inflation protection,” said Stephen Innes, APAC head of trading at Oanda. “Also, a highly anticipated stock market correction is providing support on dips which continues to support the bullish gold narrative.”
Oil prices held near three-year highs on Thursday, supported by a surprise drop in US production and lower crude inventories.
The rally that has started this year in Asian shares paused on Thursday as concerns about the U.S. administration’s protectionist stance hit Wall Street while U.S. bonds were dented by the speculation that China may curtail buying.
“Gold could test $1,327 in the short term and above which $1,362 will be opened ... Global equities are running at high level of exuberance, confidence and valuation extreme which in short stands for bubble,” said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services. “The belief “this time it is different” is all set to get a rude shock.”
Spot gold looks neutral in a range of $1,311-$1,329 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.
Meanwhile, the holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.35% to 828.96 tonnes on Wednesday from Tuesday. Holdings fell for a second straight day on Wednesday.
Among other precious metals, spot silver rose 0.4% to $17.01 an ounce. Prices fell to the lowest in nearly two weeks at $16.86 on Wednesday.
Platinum rose 0.2% to $973.10 an ounce, after touching the highest in nearly four months of $974 in the prior session. Palladium rose 0.5% to $1,088 an ounce, after seeing its worst one-day fall in over a month on Wednesday. Palladium, which rose to a record of $1,111.40 on Tuesday, fell 1.5% in the previous session. Reuters
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