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Gold Rallies from Near 6-Year Low Despite Support For Dollar
Posted On Nov 20 2015
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Gold prices gained in Asia on Friday with investors seeing a few support on political risk, but an expected Federal Reserve rate hike next month weights.
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, retreated 0.4% on Thursday after reaching the highest level in more than a decade the previous day. Prices hit the weakest in more than five years at $1,064.95 an ounce on Wednesday and are set to close the week down just 0.2 per cent. USA gold edged up by 0.3 per cent to $1,080.70 an ounce. Copper for December delivery rose 0.18% to $2.076 a pound. Fed officials on Wednesday continued to flag December as a likely time for United States interest rates to rise after seven years near zero, but the central bank signalled an intention proceed slowly and steadily after that.
Last week, initial jobless claims in the US fell by 5,000 to 271,000, in line with consensus analysts’ forecasts of 270,000 claims for the week ending on November 14.
Silver futures went up 0.140 dollar or 0.99 percent to close at USD 14.23 per troy ounce at the COMEX. At 270,750, the four-week average is up by 7,500 versus the same reading from October.
Expectations were originally for a delay in the rate hike till 2016, but the FOMC meeting in late October sent out a strong signal for a December rate hike.
Analysts noted that the report on its own would be neutral to gold, but if combined with continually positive jobs reports, it will raise the likelihood of the US Federal Reserve raising interest rates in December. A suggestion in the minutes of the Federal Reserve’s last meeting that the bank would move cautiously on rates prompted the short covering. This is because the dollar- priced precious metal would struggle to compete with assets that are yield-bearing, when interest rates are on the rise.
Gunfire also erupted in a north Paris suburb early on Wednesday as special police forces launched an operation to catch one of the suspects believed to be behind last week’s gun and bomb attacks.
