Gold ticks higher

Kuwait Times - - BUSINESS -

Gold hov­ered at slightly firmer lev­els yes­ter­day as in­vestors kept to the side­lines, con­fi­dent that the US cen­tral bank will hike rates, but un­sure about guid­ance for next year. Bul­lion was sup­ported by a softer dol­lar ahead of a US Fed­eral Re­serve an­nounce­ment later that mar­kets over­whelm­ingly ex­pect will be an in­ter­est rate hike of a quar­ter per­cent­age point. Mar­kets are un­sure, how­ever, about whether the Fed will sig­nal more rate hikes next year. “Gold is in no-man’s land to­day, wait­ing for more insight from the Fed­eral Re­serve,” said Gian­clau­dio Tor­l­izzi, part­ner at con­sul­tancy T-Com­mod­ity in Mi­lan.

“In the­ory the Fed might surprise on the hawk­ish side, but the dol­lar has risen to a level that al­ready in­cor­po­rates an­other two hikes. So it’s pretty messy, the dol­lar is ru­in­ing the Fed’s plan.” Spot gold was up 0.3 per­cent at $1,161.51 an ounce by 1052 GMT and US gold fu­tures added 0.4 per­cent to $1,163.80. The Fed is due to release its lat­est pol­icy and in­ter­est rate state­ment at 1900 GMT with new fore­casts as­sess­ing whether the eco­nomic out­look has changed since the elec­tion.

Higher US rates raise the op­por­tu­nity cost of hold­ing non-yield­ing bul­lion and nor­mally weigh on gold, but mar­kets have al­ready priced in a De­cem­ber rise. The dol­lar in­dex, which mea­sures the green­back against a bas­ket of cur­ren­cies, was down 0.14 per­cent at 100.93, hav­ing slipped from this week’s high of 101.78 touched early on Mon­day. “The mar­ket ex­pects that maybe (Fed Chair Janet) Yellen’s com­ments tonight on rate hike pro­jec­tions for the next year will not be too hawk­ish,” said He­len Lau, an an­a­lyst at Arg­onaut Se­cu­ri­ties in Hong Kong. “So that is the rea­son why dol­lar has weak­ened a lit­tle bit, and that’s what is sup­port­ing gold prices.”

Mean­while, hold­ings of SPDR Gold Trust, the world’s largest gold-backed ex­change-traded fund, are down over 9 pct since Novem­ber. “Peo­ple who in­vest in ETFs will have a rel­a­tively longer-term view, so the cur­rent ro­ta­tion is ro­tate out of gold to risky as­sets, ex­pect­ing that the US eco­nomic sit­u­a­tion will im­prove,” Lau said. Else­where, sil­ver was up 0.9 per­cent at $17.05 per ounce af­ter fall­ing nearly 1 per­cent in the pre­vi­ous ses­sion. Plat­inum rose 0.4 per­cent to $936 an ounce. Pal­la­dium dipped 0.3 per­cent to $726.85 an ounce, hav­ing risen about 1 per­cent on Tues­day. — Reuters

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