Thursday Nov 14, 2024
Thursday Nov 14, 2024
Friday, 31 July 2015 00:00 - - {{hitsCtrl.values.hits}}
Reuters: Gold dipped towards its weakest level since early 2010 on Thursday after the Federal Reserve said the US economy continues to strengthen, supporting a potential interest rate rise when the Fed meets again in September.
After a two-day meeting, policymakers said on Wednesday they felt the economy had overcome a first-quarter slowdown and was “expanding moderately”.
That buoyed the greenback against a basket of currencies, making dollar-priced gold more costly for buyers using other currencies.
Spot gold dropped 0.3% to $1,093.40 an ounce by 0239 GMT. It sank to as low as $1,077 last week, its weakest since February 2010, after a selloff in New York and Shanghai and has since struggled to recover above $1,100.
“We still do think the bearish pressure on gold prices is strong. We don’t expect to see any substantial recovery,” said Howie Lee, analyst at Phillip Futures in Singapore.
Whether a US rate hike – which would be the first since 2006 – came in September or December was immaterial, said Lee who sees the next major support at $1,000.
“The slide that we’ve seen last week showed investors were already pricing in the effect of the first rate hike whether it’s September or December. What matters is after the first rate hike, how would they conduct the rest of the rate increases.”
US gold for August delivery was flat at $1,092.70 an ounce.
MKS Group dealer Samuel Laughlin sees support for gold around $1,090 “with further selling pressure on any rallies above $1,100 keeping the topside limited for the time being.”
Later on Thursday, the first estimate of second-quarter US gross domestic product will be released, with the economy seen returning to growth, expanding by 2.7%, after contracting in a weather-battered first quarter.
A substantially higher growth number would strengthen views for a September rate hike, Mizuho Bank said.
“We think that the Fed will adopt a gradual pace of tightening, we expect only one rate hike this year. And policy will continue to be conditioned on data,” the bank said in a note.
A looming increase in US interest rates had weighed on non-interest bearing gold, with some analysts predicting further falls before and after the actual rate hike.
Holdings of the largest gold-backed exchange-traded-fund, New York’s SPDR Gold Trust, were unchanged at 21.87 million ounces for a second day on Tuesday. That level is the lowest since September 2008.
In other metals, spot platinum was up 0.5%, palladium rose 0.7% and silver gained 0.4%.
