Gold prices rise

BENGALURU. — Gold prices rose for a fourth day yesterday as the dollar eased on signs of slower economic activity in the US that dented the expectation of an aggressive string of interest rate increases by the US Federal Reserve.

The New York Federal Reserve bank said on Monday that its Empire State manufacturing activity index, a report on business activity in the state, unexpectedly fell in May, sinking into negative territory for the first time since October.

The weaker than expected report could be a harbinger a possible deterioration in the US manufacturing sector. Spot gold gained 0,3 percent at $1 233 per ounce at 4.03am GMT. On Monday, it touched its highest since May 4 at $1 237,26. US gold futures were up 0,3 percent at $1 233,60 per ounce.

“In the shorter term it (weaker US data) could lift gold prices to a certain extent as it ensures the pace of the interest rate hikes do not accelerate,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

The expectation of a US rate increase in June fell to 74 percent compared with 84 percent last week, according to the CME Fedwatch.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Risk aversion sentiment due to recent global developments including the North Korean missile test, the huge “ransomware” cyber attack and controversies surrounding US President Donald Trump could lift gold prices over the next two weeks, Wing Fung’s To added. Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold could rise more to $1 245 per ounce, as it had cleared a resistance at $1 233, said Reuters technical analyst Wang Tao.