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PRECIOUS-Gold near 3-1/2-month high on bets Fed to delay rate hike
October 15, 2015 / 4:05 AM / 2 years ago

PRECIOUS-Gold near 3-1/2-month high on bets Fed to delay rate hike

* Gold steadies after 4-day rally, platinum hits 5-week high
    * Dollar at seven-week low
    * Chinese premiums dip on higher prices

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Oct 15 (Reuters) - Gold held near a 3-1/2-month
high on Thursday, following a four-day rally, as sluggish
economic data from China and the United States stoked
speculation the Federal Reserve will not raise rates this year.
    Spot gold steadied at $1,185.10 an ounce by 0639 GMT,
after climbing to $1,190 in the previous session, its highest
since June 22. Silver hit a 3-1/2-month high of $16.18,
while platinum climbed to a five-week high of $1,002.50. 
    Data on Wednesday showed U.S. retail sales barely rose in
September and producer prices recorded their biggest decline in
eight months. Consumer inflation in China cooled more than
expected in September, while producer prices extended their
slide to a 43rd straight month.
    Investors believe the sluggishness in the U.S. economy
amidst a weak global economic backdrop may cause Fed
policymakers to delay the first rate increase in nearly a decade
to 2016. Gold, as a non-yielding asset, tends to benefit from
ultra-low rates.
    "Soft U.S. retail and inflation combined with
disinflationary China data undercut the rationale for a rate 
rise in some investor's view and helped propel gold," said HSBC
analyst James Steel.
    "But more than that, we continue to sense changing attitudes
to gold from investors, with recent positive comments from some
fund managers," he said.
    Elliott Management Chief Executive Paul Singer said on
Wednesday every institutional portfolio should be 5-10 percent
invested in gold to protect against zero interest rates that are
degrading the value of paper currency. 
    Gold was the one tradable asset that has been "treated
unfairly", he said at the Sohn Investment Conference, adding
that his fund holds gold through options.    
    Steel said $1,200, however, may still be a tough resistance
level.
    Bullion was also supported on Thursday by weakness in the
dollar. 
    The greenback wallowed around seven-week lows against a
basket of currencies, after weak U.S. data prompted investors to
scale back bets that the Fed would hike interest rates by the
end of 2015. 
    Physical buying of gold, however, softened due to the rise
in prices.
    Premiums on the Shanghai Gold Exchange, an indication of
demand in top consumer China, fell to about 50 cents an ounce on
Thursday from $2-$3 in the previous session. Earlier in the day,
the Chinese prices had even dipped to a small discount. 
    Investors will be watching for more data due later in the
session, including weekly jobless claims, for clues about the
economy and its impact on the Fed monetary policy. 
        
    PRICES AT 0639 GMT
 Metal             Last     Change  Pct chg
                                           
 Spot gold          1185.1    0.29     0.02
 Spot silver         16.13    0.01     0.06
 Spot platinum      997.99    1.99      0.2
 Spot palladium      700.5       3     0.43
 Comex gold         1185.3     5.5     0.47
 Comex silver        16.15   0.033      0.2
                                           
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Subhranshu Sahu)

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