SINGAPORE: Gold prices rose for a fourth day on Tuesday as the dollar slid on signs of slower economic activity in the United States that dented expectations of an aggressive string of interest rate hikes by the US Federal Reserve.
The New York Federal Reserve bank said on Monday its Empire State Manufacturing Activity index, a report on business activity in the state, unexpectedly fell in May, sinking into negative territory for the first time since October. The weaker-than-expected report could be a harbinger a possible deterioration in the US manufacturing sector.
Spot gold was up 0.4 percent at $1,234.81 per ounce at 0731 GMT. On Monday, it hit $1,237.26, its highest since May 4.
US gold futures gained 0.4 percent to $1,234.90 an ounce.
“In the shorter term it (weaker US data) could lift gold prices to a certain extent as it ensures the pace of the interest rate hikes do not accelerate,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
Spot gold may rise more to $1,245 per ounce, as it has cleared a resistance at $1,233, according to Reuters technical analyst Wang Tao.—Reuters
Gold rises in NY
NEW YORK: Gold rose as US political turmoil, a missile test by North Korea and a worldwide cyber attack fueled demand for safe-haven assets, while weaker than expected US data pushed the dollar lower, making gold cheaper for holders of other currencies.
Spot gold was up 0.2 percent at $1,230.15 an ounce by 2:11 p.m. EDT (1811 GMT), on track for a third day of gains after hitting an eight-week low of $1,213.81 last week. US gold futures settled up 0.2 percent at $1,230.
“Continued unpredictability of the Trump administration, North Korea flexing its muscles again and weaker data coming from the US has helped bring back some interest,” said Ole Hansen, head of commodities strategy at Saxo Bank.
Worse than expected US data has reduced expectations of aggressive interest rate increases by the US Federal Reserve this year, though traders still expect a rise in June.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Gold prices pared gains as the US dollar came off its lows and US 10-year Treasury yields bounced up from a 1-1/2-week low.
“Unless there is more stronger data, more than two rate hikes are not very likely (this year),” said Argonaut Securities analyst Helen Lau.
Money managers’ net longs in COMEX gold fell to the lowest in six-weeks in the week ending May 9.
In other precious metals, silver was up 1.1 percent at $16.63 an ounce, after money managers cut their net long stance in silver to the smallest since February 2016 from a record high last month.
Platinum was up 1.1 percent at $927.48, as producers, fabricators and traders gathered for Platinum Week in London.
Palladium turned down 1.1 percent to $797.40 an ounce.—Reuters
