Gold prices inch 0.2% higher on floppy dollar effect
Temitayo Ayetoto is Businessamlive Reporter.
You can contact her on temitayo.ayetoto@businessamlive.com with stories and commentary.
Gold prices inched higher Monday on subdued dollar as investors considered the prospects of fewer U.S. interest rate increases in 2018.
Spot gold was up 0.2 percent at $1,320.45 per ounce, after marking the highest since April 26 at $1,325.96 in the previous session.
US gold futures for June delivery were slightly changed at $1,320.50, though the weakness in dollar appears to be helping gold prices in Asia, a Hong Kong-based trader said.
“Gold is consolidating. The inflation data gave people an opportunity to sell the dollar and gold benefited from that,” the trader said.
The dollar eased 0.1 percent to 92.408 versus a basket of six major currencies, retreating further from its 2018 peak hit last week, after softer economic data last week curbed prospects of aggressive rate increases in the US.
James Bullard, St Louis Federal Reserve Bank president on Friday spelt out the case against any further interest rate increases, saying rates might already have reached a neutral level that is no longer stimulating the economy. Gold is highly sensitive to rising US rates as these tend to boost the dollar and push bond yields up, adding pressure on the greenback-denominated, non-yielding bullion.
While gold prices are likely to be drawing some support from a rift between the US and Iran, investors said easing US-China trade concerns could add downside risks to prices.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.62 percent to 857.64 tonnes on Friday.
Speculators raised their net long position in Comex gold contracts by 636 contracts to 52,621 in the week to May 8, US Commodity Futures Trading Commission (CFTC) data showed.
In other precious metals, silver was up 0.6 percent at $16.71, after hitting a two-and-a-half-week high in the previous session.
Platinum rose 0.3 percent to $924.50, having hit its peak since April 25 at $929.10 on Friday.
Palladium was 0.1 percent lower at $994.70 , after hitting a two-and-a-half-week high at $1,008.50 on Friday.