Gold prices gain for second day as dollar’s rise takes a breather
Gold for immediate delivery rose as much as 0.6% to $1,221.16 an ounce.
With US dollar index off the high, investors have found some reason to buy gold. Photo: Hemant Mishra/ Mint
Singapore: Gold headed for the first back-to-back gain since Donald Trump’s US presidential election win as a halt in the dollar’s rally buoyed demand for the precious metal as an alternative investment.
Bullion extended a rebound from the lowest in more than five months as a Bloomberg gauge of the dollar retreated from the highest since January. The metal slumped in the past two weeks, surprising many analysts, as Trump’s pledge to boost infrastructure spending bolstered the outlook for growth and inflation and pushed bets on higher US borrowing costs to a certainty.
“With US dollar index off the high, it has removed one of the negative factors and this has given some reason for investors to buy,” Madhavi Mehta, an analyst at Mumbai-based Kotak Commodity Services Pvt, said in an email reply. “Today’s rise could also be partly due to nervousness post-Japanese earthquake news.”
Bullion for immediate delivery rose as much as 0.6% to $1,221.16 an ounce and traded at $1,218.24 by 10 am in London, according to Bloomberg generic pricing. Bullion last gained for two straight days on 4 November.
Investors have been cutting holdings in bullion-backed funds on expectation that the Federal Reserve will raise interest rates next month, curbing the appeal of owning gold because it doesn’t pay interest. Assets fell 9.4 metric tons to 1,923.1 tons Monday, the lowest since July, data compiled by Bloomberg show. The eighth straight decline was the longest run in almost a year. Bloomberg
