New Delhi: Gold edged higher on Tuesday due to a fall in the dollar, although concerns over further rate hikes by the US Federal Reserve capped gains in non-yielding bullion.
spot gold It was up 0.3% at $1,791.91 an ounce as of 0636 GMT. US gold futures rose 0.1% to $1,800.20.
The dollar index eased 0.3% as the yen rose after the Bank of Japan (BOJ) said it would review its yield curve control policy. A weaker dollar makes gold more attractive to foreign buyers.
Matt Simpson, a senior market analyst at City Index, said the BOJ’s announcement surprised markets during thin trading, and as a result gold has sucked out safe-haven investment flows after the dollar weakened.
However, “prospects of a higher terminal Fed rate could keep gold from rising sharply next year”.
Last week, Fed Chairman Jerome Powell said the US central bank would hike rates more next year to curb inflation. Other major central banks have also highlighted a similar dovish stance.
Although gold is considered an inflation hedge, higher rates increase the opportunity cost of holding the asset.
Luis de Guindos, vice president of the European Central Bank, indicated that the bank is determined to continue raising interest rates.
Investors also took stock of news that in top bullion consumer China, COVID-19 is spreading through trading floors in Beijing and increasingly in the financial hub of Shanghai. The country reported five new deaths from Covid on 19 December.
“If China does roll back sanctions and if that happens over the holiday period, that’s the perfect catalyst for a bigger move (in gold),” Simpson said.
spot silver up 0.4% to $23.04, platinum up 0.4% to $983.25 and Durg was up 1% at $1,685.16.
spot gold It was up 0.3% at $1,791.91 an ounce as of 0636 GMT. US gold futures rose 0.1% to $1,800.20.
The dollar index eased 0.3% as the yen rose after the Bank of Japan (BOJ) said it would review its yield curve control policy. A weaker dollar makes gold more attractive to foreign buyers.
Matt Simpson, a senior market analyst at City Index, said the BOJ’s announcement surprised markets during thin trading, and as a result gold has sucked out safe-haven investment flows after the dollar weakened.
However, “prospects of a higher terminal Fed rate could keep gold from rising sharply next year”.
Last week, Fed Chairman Jerome Powell said the US central bank would hike rates more next year to curb inflation. Other major central banks have also highlighted a similar dovish stance.
Although gold is considered an inflation hedge, higher rates increase the opportunity cost of holding the asset.
Luis de Guindos, vice president of the European Central Bank, indicated that the bank is determined to continue raising interest rates.
Investors also took stock of news that in top bullion consumer China, COVID-19 is spreading through trading floors in Beijing and increasingly in the financial hub of Shanghai. The country reported five new deaths from Covid on 19 December.
“If China does roll back sanctions and if that happens over the holiday period, that’s the perfect catalyst for a bigger move (in gold),” Simpson said.
spot silver up 0.4% to $23.04, platinum up 0.4% to $983.25 and Durg was up 1% at $1,685.16.