Gold ex­tends gains after re­lease of min­utes of lat­est Fed meet­ing

Business World - - WORLD MARKETS -

NEW YORK/LONDON — Gold ex­tended gains after Septem­ber min­utes from the US Fed­eral Re­serve showed pol­icy mak­ers de­bated the prospects of a pickup in in­fla­tion and the path of fu­ture in­ter­est rate rises if it did not.

The US cen­tral bank should grad­u­ally in­crease in­ter­est rates over the next two years, bring­ing the fed­eral funds rate to 2.50%, said San Fran­cisco Fed Pres­i­dent John Wil­liams, sep­a­rately at an event in Utah.

Spot gold was up 0.40% at $1,292.88 per ounce by 3:43 p.m. EDT (1943 GMT), while US gold fu­tures for De­cem­ber de­liv­ery set­tled down $4.90, or 0.40%, at $1,288.90 per ounce, prior to the re­lease of the min­utes.

“The Fed min­utes seemed to be stress­ing that low in­fla­tion may not be tran­si­tory and em­pha­sized data de­pen­dency,” said Bart Melek, head of com­mod­ity strat­egy at TD Se­cu­ri­ties in Toronto.

“This is some­what pos­i­tive for gold rel­a­tive to where we were po­si­tioned just ahead.”

Gold could reach $ 1,300 per ounce by week’s end, Mr. Melek added.

Gold is highly sen­si­tive to ris­ing in­ter­est rates, as these in­crease the op­por­tu­nity cost of hold­ing non-yield­ing bul­lion while boost­ing the dol­lar, in which the metal is priced.

Spot gold hit the high­est level in nearly two weeks on Tues­day, and on Wed­nes­day, made its fourth straight day of gains.

Be­fore that, gold had been de­clin­ing since early Septem­ber after touch­ing a one-year high of $1,357.54.

The dol­lar in­dex fell to the low­est in nearly two weeks, mak­ing dol­lar- priced gold cheaper for buy­ers us­ing other cur­ren­cies.

“These con­cerns about the ram­i­fi­ca­tions of the Cata­lan in­de­pen­dence ref­er­en­dum are fad­ing, giv­ing some sup­port to the euro and weak­en­ing the dol­lar,” said Jens Ped­er­sen, se­nior an­a­lyst at Danske Bank in Copen­hagen.

Cat­alo­nia’s leader, who balked ear­lier at mak­ing a for­mal dec­la­ra­tion of in­de­pen­dence, to­gether with more up­beat pre­dic­tions for the global econ­omy, helped push world stocks to an­other record high.

“With eq­ui­ties at all- time highs, gold also looks at­trac­tive as a hedge, es­pe­cially given the cor­re­la­tion be­tween the two as­sets has re­mained in neg­a­tive ter­ri­tory this year,” Joni Teves, strate­gist at UBS in London, said in a note.

Among other pre­cious met­als, sil­ver rose 0.80% to $ 17.22 per ounce, hav­ing hit a three-week high in the pre­vi­ous ses­sion.

Plat­inum rose 0.02% to $ 929.20 per ounce, hit­ting a two-week high of $ 934.50 and pal­la­dium in­creased 2.80% at $ 959.75, a one- month high. —

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