Gold Near Multi-Year Lows as US Data Supports Rate Hike View
Singapore: Gold hovered close to its lowest in nearly six years on Thursday, as the dollar held at multi-month highs and US economic data reinforced market expectations of an interest rate hike this year.
Spot gold was little changed at $1,070.80 an ounce by 0031 GMT (6:01 a.m. in India), after dropping 0.4 per cent on Wednesday. The metal had fallen to $1,064.95 last week, the lowest since February 2010.
Data on Wednesday showed that US manufacturing output rose well above economists’ expectations in October, while business spending plans surged. New applications for unemployment benefits dropped last week.
Though other data showed only a small increase in US consumer spending in October, it did little to alter views that the economy was strong enough for the Federal Reserve to raise rates at its next policy meeting in December.
Higher rates would dent the appeal of non-interest-paying bullion, while boosting demand for the dollar.
The dollar climbed to its highest in eight months against a basket of major currencies on Wednesday on the robust US data.
A stronger greenback makes dollar-denominated gold expensive for holders of other currencies.
Gold had seen some safe-haven bids earlier in the week after Turkey downed a Russian fighter jet, stoking tensions between the two countries, but have faded since as investors fretted over the US rate hike.
Any worsening of tensions could see investors seeking safety in bullion. Russia sent an advanced missile system to Syria on Wednesday to protect its jets operating there and pledged its air force would keep flying missions near Turkish air space.
Exchanges, brokers and data vendors are interested in providing clearing or reporting services to make the gold market more liquid and transparent, the London Bullion Market Association said on Wednesday.
The US Mint said on Wednesday that it would begin sales of 2015 American Eagle platinum proof coins on December 3 but would not produce 2015 platinum bullion coins this year due to a lag in obtaining a sufficient amount of blanks.
Asian shares advanced in early trade on Thursday, while growing bets the European Central Bank was gearing up to deliver further stimulus steps kept the euro under pressure.
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Source:Ndtv
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