Gold edges up

BENGALURU. — Gold edged up yesterday to hold just above an eight-week low hit earlier this week, with the US dollar declining against the yen.

Spot gold was up 0,2 percent at $1 220,56 per ounce by 3.16am GMT. It hit an eight-week low of $1 213,81 on Tuesday. US gold futures also gained 0,2 percent, to $1 220,70 per ounce.

“Combined with a moderation in confrontational foreign policy rhetoric from the Trump administration in May, a ‘market friendly’ election result in France is helping to unwind demand for gold to hedge against political risk,” BMI Research said in a note.

“Receding risk aversion in Europe and hawkish language from the US Federal Reserve will cap gold demand in the near term,” BMI added, cutting its 2017 average gold price forecast to $1 250 per ounce from $1 300.

The Fed should increase interest rates three more times this year, Boston Fed president Eric Rosengren said on Wednesday. Markets are pricing in around a 90 percent chance that the economy is strong enough for the Federal Reserve to raise interest rates at its meeting in June. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. The dollar edged lower after notching an eight-week high against the yen in Asian trade. Spot gold was expected to test support at $1 209 per ounce, a break below which could cause a further loss to the next support at $1 188, said Reuters technical analyst Wang Tao.

“From a pure technical-fundamental aspect, everybody would be eyeing $1 200 as the next level of support, but I think $1 215 support here is not out of the question,” said Spencer Campbell, general manager with Kaloti Precious Metals in Singapore.