Gold posts third day of losses as dollar strengthens
by Jan Harvey,
2016-03-21 13:44:30.0
LONDON — Gold fell more than 1% on Monday, extending losses for a third day as the dollar strengthened, but prices remained underpinned by expectations that the ultra-low interest rate environment will persist on a global level.
The dollar is up 0.1% against the euro after falling for three successive weeks, most recently after US Federal Reserve policy makers revised down the number of times they expect to raise interest rates this year to two from four.
Spot gold was down 0.8% at $1,244.91 an ounce at 10am GMT, while US gold futures for April delivery were down $8.60 an ounce at $1,245.70.
The metal has risen 17% this year as expectations for fresh interest rate increases faded.
Gold rallied on Wednesday last week after the Fed cut the number of interest rate hikes it foresees this year, but the metal failed to revisit the previous week’s 13-month high and quickly slid lower as the US unit bounced back.
"(Gold is) under pressure once again this morning as the dollar strengthens," Mitsubishi analyst Jonathan Butler said.
"Despite the Fed’s ‘lower for longer’ stance, it still looks to be one of the more hawkish central banks, compared with the European Central Bank and Bank of Japan with zero and negative interest rate policies respectively."
Ultra-low interest rates cut the opportunity cost of holding nonyielding assets such as gold, as well as stoking longer-term fear over inflation.
Market indicators are signalling that investors see stronger risks of inflation, which has been almost nonexistent since the credit crisis, despite scepticism from the Fed and the relatively slow pace of US economic growth.
Holdings of gold-backed exchange-traded funds, which issue securities backed by physical metal, continued to rise.
The largest, New York-listed SPDR Gold Shares, reported an inflow of another 11.9 tonnes on Friday, bringing its total inflow for the year to 176.6 tonnes, up from 40.8 tonnes in the same period of last year.
Trading was quiet in the big physical gold markets in Asia overnight, with Japan closed for a holiday.
"Gold opened right where we closed last week and it was primarily small offers which dominated early flows," MKS said in a note. "The turnover on Ecomex was noticeably lower than what we saw last week and may continue for the rest of the week, considering the shortened Easter holiday week for most Western markets."
Among other precious metals, silver was down 0.2% at $15.75 an ounce, while platinum was down 0.3% at $695.05 an ounce and palladium was down 0.6% at $585.10 an ounce.
Reuters
Picture: AFP PHOTO/OZAN KOSE
LONDON — Gold fell more than 1% on Monday, extending losses for a third day as the dollar strengthened, but prices remained underpinned by expectations that the ultra-low interest rate environment will persist on a global level.
The dollar is up 0.1% against the euro after falling for three successive weeks, most recently after US Federal Reserve policy makers revised down the number of times they expect to raise interest rates this year to two from four.
Spot gold was down 0.8% at $1,244.91 an ounce at 10am GMT, while US gold futures for April delivery were down $8.60 an ounce at $1,245.70.
The metal has risen 17% this year as expectations for fresh interest rate increases faded.
Gold rallied on Wednesday last week after the Fed cut the number of interest rate hikes it foresees this year, but the metal failed to revisit the previous week’s 13-month high and quickly slid lower as the US unit bounced back.
"(Gold is) under pressure once again this morning as the dollar strengthens," Mitsubishi analyst Jonathan Butler said.
"Despite the Fed’s ‘lower for longer’ stance, it still looks to be one of the more hawkish central banks, compared with the European Central Bank and Bank of Japan with zero and negative interest rate policies respectively."
Ultra-low interest rates cut the opportunity cost of holding nonyielding assets such as gold, as well as stoking longer-term fear over inflation.
Market indicators are signalling that investors see stronger risks of inflation, which has been almost nonexistent since the credit crisis, despite scepticism from the Fed and the relatively slow pace of US economic growth.
Holdings of gold-backed exchange-traded funds, which issue securities backed by physical metal, continued to rise.
The largest, New York-listed SPDR Gold Shares, reported an inflow of another 11.9 tonnes on Friday, bringing its total inflow for the year to 176.6 tonnes, up from 40.8 tonnes in the same period of last year.
Trading was quiet in the big physical gold markets in Asia overnight, with Japan closed for a holiday.
"Gold opened right where we closed last week and it was primarily small offers which dominated early flows," MKS said in a note. "The turnover on Ecomex was noticeably lower than what we saw last week and may continue for the rest of the week, considering the shortened Easter holiday week for most Western markets."
Among other precious metals, silver was down 0.2% at $15.75 an ounce, while platinum was down 0.3% at $695.05 an ounce and palladium was down 0.6% at $585.10 an ounce.
Reuters
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