Gold edges off multiyear lows as dollar, stocks retreat
by Jan Harvey,
2015-11-24 13:40:16.0
LONDON — Gold recovered from near six-year lows on Tuesday as stocks and the dollar retreated, but remained under pressure from expectations the US Federal Reserve will press ahead with its first interest rate hike in nearly a decade next month.
Platinum meanwhile dipped to its lowest in nearly seven years, putting it on track to fall 14% in November, its biggest monthly drop since September 2011.
Spot gold was up 0.4% at $1,073.10 an ounce at 10.30am GMT, while US gold futures for December delivery were up $5.50/oz at $1,072.30.
Gold slid to its lowest since February 2010 last week at $1,064.95/oz, and pressed back to within a few dollars of that level on Monday as the US unit hit an eight-month high against a currency basket. It has since recovered, but remains vulnerable, analysts said.
"If the dollar continues to strengthen, gold will soften. It won’t necessarily be a smooth trajectory, but I don’t see any reason why it should pick up," Citi analyst David Wilson said.
"Markets are still targeting that December rate hike. If you look at the relationship with the dollar this year, that’s really the driver."
Gold tends to benefit from ultra-low US rates, which cut the opportunity cost of holding non-yielding bullion, while weighing on the dollar. Its 9% drop so far this year has come largely on rate hike speculation.
Holdings of the world’s largest gold-backed exchange traded fund, New York-listed SPDR Gold Shares, fell to 655.69-tonnes on Monday, the lowest since September 2008.
Physical demand in top consuming region Asia showed signs of strength. Premiums on the Shanghai Gold Exchange, a proxy for physical demand in China, were at $5/oz on Tuesday, versus $3-$4 at the beginning of the month.
"The physical demand in China is strong," HSBC said in a note.
"Eventually this ... will percolate through to prices, but first gold may have to fall a bit more in the mean time."
Gold may also take support from geopolitical concerns, traders said, after officials said Turkish fighter jets had shot down a Russian-made warplane near the Syrian border on Tuesday.
Moscow said it could prove the jet had not left Syrian air space.
Among other precious metals, silver was up 0.3% at $14.13/oz, while palladium was down 0.5% at $534/oz. Platinum was down 0.6% at $835.25/oz, off an earlier low of $831.80/oz.
The platinum market deficit will shrink this year, before moving into a small surplus in 2016 as supply from mining and recycling rises and investment falls, the World Platinum Investment Council said in a report on Tuesday.
Reuters
Picture: ISTOCK
LONDON — Gold recovered from near six-year lows on Tuesday as stocks and the dollar retreated, but remained under pressure from expectations the US Federal Reserve will press ahead with its first interest rate hike in nearly a decade next month.
Platinum meanwhile dipped to its lowest in nearly seven years, putting it on track to fall 14% in November, its biggest monthly drop since September 2011.
Spot gold was up 0.4% at $1,073.10 an ounce at 10.30am GMT, while US gold futures for December delivery were up $5.50/oz at $1,072.30.
Gold slid to its lowest since February 2010 last week at $1,064.95/oz, and pressed back to within a few dollars of that level on Monday as the US unit hit an eight-month high against a currency basket. It has since recovered, but remains vulnerable, analysts said.
"If the dollar continues to strengthen, gold will soften. It won’t necessarily be a smooth trajectory, but I don’t see any reason why it should pick up," Citi analyst David Wilson said.
"Markets are still targeting that December rate hike. If you look at the relationship with the dollar this year, that’s really the driver."
Gold tends to benefit from ultra-low US rates, which cut the opportunity cost of holding non-yielding bullion, while weighing on the dollar. Its 9% drop so far this year has come largely on rate hike speculation.
Holdings of the world’s largest gold-backed exchange traded fund, New York-listed SPDR Gold Shares, fell to 655.69-tonnes on Monday, the lowest since September 2008.
Physical demand in top consuming region Asia showed signs of strength. Premiums on the Shanghai Gold Exchange, a proxy for physical demand in China, were at $5/oz on Tuesday, versus $3-$4 at the beginning of the month.
"The physical demand in China is strong," HSBC said in a note.
"Eventually this ... will percolate through to prices, but first gold may have to fall a bit more in the mean time."
Gold may also take support from geopolitical concerns, traders said, after officials said Turkish fighter jets had shot down a Russian-made warplane near the Syrian border on Tuesday.
Moscow said it could prove the jet had not left Syrian air space.
Among other precious metals, silver was up 0.3% at $14.13/oz, while palladium was down 0.5% at $534/oz. Platinum was down 0.6% at $835.25/oz, off an earlier low of $831.80/oz.
The platinum market deficit will shrink this year, before moving into a small surplus in 2016 as supply from mining and recycling rises and investment falls, the World Platinum Investment Council said in a report on Tuesday.
Reuters
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