Gold rises on bargain hunting, limited dollar gain on US rate hike
Gold prices rose on Thursday as investors looked for bargains after the metal fell to a two-week low in the previous session following a U.S. interest rate hike and as limited gains in the dollar after the decision supported demand for the metal.
Spot gold had risen 0.4 percent to $1,198.22 an ounce as of 0404 GMT. On Wednesday, the metal touched its lowest since September 11 at $1,190.13 an ounce.
Spot gold prices have closed in a range between $1,210 and $1,190 an ounce since Aug. 28.
U.S. gold futures were up 0.3 percent at $1,202.10 an ounce.
As expected the U.S. Federal Reserve raised interest rates for the third time this year on Wednesday, and left intact its plans to steadily tighten monetary policy, as it forecast that the U.S. economy would enjoy at least three more years of growth.
“The fact that the Fed didn’t come out as overly hawkish meant there was some positivity felt through emerging market currencies. This may be playing in gold being gingerly bought,” said Stephen Innes, APAC trading head at OANDA in Singapore.
“We are still big sellers towards $1,200 an ounce and buyers towards $1,190… Bargain hunting is definitely coming to the equation at the lower end of the scale.”
MSCI’s index for emerging market currencies edged up 0.2 percent on Thursday.
Meanwhile, the dollar steadied against its peers as the small boost it received from the Fed interest rate hike faded, with a decline in U.S. Treasury yields reducing support for the greenback.
“The Fed statement did not have much of an impact on the dollar and so we would venture to guess that the greenback could resume a little lower over the course of the next week or two, possibly giving gold an element of support,” INTL FCStone analyst Edward Meir said in a note.
However, there is little evidence that gold’s tight trading range will change anytime soon, Meir added.
Gold is sensitive to higher interest rates because they boost the dollar, making bullion more expensive for buyers using other currencies.
Gold has fallen more than 12 percent since hitting a peak in April against a backdrop of trade disputes and as the rising U.S. interest rates have cut demand for non-interest bearing bullion.
Meanwhile, China on Wednesday unveiled plans to cut tariffs for products including machinery, electrical equipment and textile products beginning on Nov. 1, as the country braces for an escalating trade war with the United States.
Among other precious metals, spot palladium rose 0.4 percent to $1,071.22 an ounce, hovering near an eight-month high of $1,075 hit in the previous session.
Silver rose 1.1 percent to $14.44 an ounce and platinum gained 0.7 percent to $826.70 per ounce.
Source: Reuters
