Gold rebounds from one-month low, poised for third weekly decline
London (Jan 2) Gold rebounded from a one-month low on Friday, as lower equities counteracted the impact of a stronger dollar and falling oil markets, but still looked set to post its third straight weekly loss.
Spot gold fell to its lowest since December 1 at $1,168.25 an ounce after the dollar strengthened, but rebounded to $1,191.00 by 3.49pm GMT, up 0.8%. Liquidity was thin in post-holiday trading, with Chinese and Japanese markets closed. Prices were heading for a 0.5% weekly decline, the third straight week of losses.
US gold futures for delivery in February rose 0.6% to $1,191.20 an ounce.
Bullion ended 2014 down nearly 2%, following a 28% slump the previous year.
Anticipated US interest rate hikes and a recovering economy may strengthen the dollar’s appeal in 2015. Higher rates weigh on non-interest-bearing bullion, while a stronger dollar makes gold more expensive for holders of foreign currencies.
"We have an overwhelming consensus that the dollar is going to go higher again and the US Fed is going to start raising rates to normalise monetary conditions at some point over the next six to nine months," Natixis analyst Nic Brown said. "This means that precious metals will remain under pressure." The dollar rose to its highest level in nearly nine years, up 0.7% against a basket of six major currencies, mostly on a lower euro, which hit a four-and-a-half-year low after the European Central Bank fanned expectations it would take bolder steps on monetary stimulus later this month.
Some demand for the metal returned after a series of disappointing US economic data, which weighed on global shares.
The US manufacturing sector slowed in December to its lowest rate of growth since last January. Separately, US construction spending unexpectedly fell in November.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.25% to a fresh six-year low of 709.02 tonnes on Wednesday. Redemptions in 2014 reached 140 tonnes, well below the 460 tonne outflow seen in 2013.
Silver was up 1.2% at $15.91 an ounce after posting a 19.3% decline in 2014.
Platinum fell 0.4% at $1,202.30 an ounce, having fallen 12% last year.
With an 11% jump, palladium was the best-performing precious metal in 2014, mostly on supply concerns from top producer Russia. Prices were up 0.5% at $795.65 an ounce.
Source: bdLive.za
