Gold strengthens

BENGALURU. — Gold inched up yesterday, but the metal held near a six-week low hit in the previous session as the dollar remained firm on the expectation that the US Federal Reserve may raise interest rates as early as June.

Spot gold rose 0,2 percent to $1 240,51 per ounce by 2.45am GMT. It fell 1,5 percent in the previous session — its worst single-day drop since November 23 — breaching both its 50-day and 200-day moving averages. Prices hit a low of $1 236,01 on Wednesday, a level not seen since March 21. US gold futures dropped 0,6 percent to $1 241,20 per ounce.

The dollar index, which measures the greenback against a basket of currencies, was up 0,1 percent yesterday after rising 0,2 percent on Wednesday.

“The price action in gold since mid-April has been technically bearish. The Fed has basically put the ship back on course with regard to their intentions to continue hiking rates,” said Jeffrey Halley, senior market analyst at Oanda.

The US Federal Reserve kept interest rates unchanged on Wednesday, downplaying weak first-quarter economic growth while emphasising the strength of the labour market, signalling it was still on track for two more rate rises this year.

“With the safe-haven premium coming off gold, there was enough to break the camel’s back. Any small rallies are going to get sold and gold is set for a deeper correction towards the $1 200 level,” Halley said. — Bloomberg.