Gold Rising From 5-year Lows As Fed Seen Delaying Rate Hike

Gold futures on the COMEX division of the New York Mercantile Exchange rose on a weaker US dollar.

Wall Street stocks have finished little changed in choppy trade as retail sales bested expectations, even as leading department stores reported lower profits.

Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report. Bullion rose in the previous five days.

Indian and Chinese demand is seen recovering in the second half, with each nation expected to consume 900 to 1,000 tonnes for the whole of the year, Hewitt said.

First-time jobless claims have held below the 300,000-level for 23 consecutive weeks, which is usually associated with a firming labor market.

“The fundamental driver for the euro was one of a broader rethink about the U.S. rate story”, said Raiko Shareef, a markets strategist at Bank of New Zealand Ltd.in Wellington.

“While the Chinese economic uncertainties could fuel further selling of Asian currencies against the dollar, a stronger dollar could cloud the U.S. economic outlook and reduce the chance of an early interest rate hike by the U.S. Federal Reserve“, the official said. In the medium to long term, however, analysts do not expect China’s yuan devaluation to bolster gold’s value as this would have to be followed by a wider round of global devaluations.

China weakened its currency for the third consecutive day on Thursday, but financial markets that had been shaken by the earlier surprise devaluation took heart as authorities pledged not to let the yuan plummet.

US rates traders are pricing in a 40 per cent chance the Fed will raise borrowing costs at its September meeting, based on the assumption that the benchmark rate will average 0.375 per cent following the increase.

Tuesday’s rise in silver prices, in contrast, saw holdings at the iShares Silver Trust (NYSEArca:SLV) fall to the lowest level in two months at 10,107 tonnes, down some 2% from this year’s highs and 7% below late-2014’s peak when prices fell hard in November. But prices have since rebounded approximately 4.5% on hopes of a delayed U.S. rate hike.

On Wednesday, gold prices for December delivery surged USD15.90 or 1.4%, to settle at USD1,123.60 an ounce, after investors sought the safe haven appeal of the precious metal as global equity markets continued to roil in the aftermath of China’s currency devaluation.

After the easing fears of currency war the focus now shifts to oil prices that plunged to six-year lows on supply concerns. The USDCNY has now sky-rocketed from 6.22 to a high of 6.59 in just over 24 hours, which highlights how huge the concerns are within China over declining exports, and how internally motivated they are to enhance export competitiveness.