Gold, silver down on China’s return from holiday, while Fed minutes awaited
London (Oct 8) Gold retreated from a two-week high and silver slumped 3% on Thursday after Chinese market participants returned from a week-long holiday and sold the metals to lock in profit.
Traders awaited minutes of the last US Federal Reserve meeting.
Spot gold eased 0.1% to $1,143.80 an ounce by 9.52am GMT. The metal had climbed to $1,153.30 in the previous session, its highest since September 24, due to a lower dollar.
Silver fell as much as 3.2% before recovering slightly to trade down 2.7% at $15.63. The drop followed silver’s four-day rally to a three-and-a-half-month high of $16.10.
Gold gained $30/oz during China’s holiday between October 1 and October 7, while silver gained about $1.50 in the same period, as the dollar weakened on sluggish US economic data.
"We’ll see prices yo-yoing until the actual Fed rate hike," Capital Economics economist Simona Gambarini said.
"Sentiment had improved slightly over the past week or so, when investors returned to gold a bit more but they are generally on the sidelines and it’s a matter of time to second-guess when the rate hike is actually going to happen."
The dollar weakened ahead of the minutes from the Fed’s September meeting, while European shares also fell.
Markets were watching out for US central bank officials’ views on the global economy and the impact on US monetary policy.
The US central bank opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China.
Fed chairwoman Janet Yellen said a rate hike would come this year, but a recent string of weak US economic data has prompted the market to push back expectations.
A delayed rate rise could support gold in the near term. The metal had earlier come under pressure from expectations that the Fed may raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion.
Elsewhere, SPDR Gold Trust, the top gold-backed exchange-traded fund, said its holdings fell 0.26% to 687.20-tonnes on Wednesday.
Platinum fell 1% to $931.74/oz and palladium dropped 1.2% to $688.70/oz.
Source: bdLive
