Gold held an advance from a five-year low as Federal Reserve Vice Chairman Stanley Fischer said that US policy makers have done their best to prepare international markets for the first interest rate increase since 2006.
Bullion for immediate delivery was at US$1,080.97 ($1,527) an ounce at 4.00pm in Singapore from US$1,082.21 on Thursday, when prices gained 1.1% as the dollar fell, according to Bloomberg generic pricing. The metal is down 0.3% this week, heading for a fifth straight week of declines, after dropping on Wednesday to US$1,064.55, the lowest since February 2010.
Bullion investors are zeroing in on when higher US borrowing costs are likely to start rising as the metal doesn’t pay interest. The US central bank, which has held rates near zero since 2008, is contemplating lifting them as the job market heals and officials gain confidence that inflation will accelerate toward the Fed’s 2 percent goal. Policy makers next meet Dec. 15-16.
“US economic data and Fed officials have continued to support a rate rise in December,” Huatai Great Wall Futures Co. said in a note. “These expectations have been factored in by the market, supporting a short-term rebound in precious metals.”
The likelihood of higher rates by year-end is 66%, up from 50% at the end of October, futures data show. Fischer said Thursday the Fed has “done everything” it can to avoid surprising markets and governments when it moves. Spot silver fell 0.3%, while platinum and palladium rose.
“Gold is likely behaving as a technical play again, with US$1,080 as a handle market-watchers view as a ‘middle-ground’, a phenomenon of some pricing-in effect,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore, said by e-mail.
Gan said gold is still prey to “downside risk” if the Fed does move in December, potentially falling to US$1,050. If the rate increase fails to materialise, the metal could edge higher to US$1,200 through the end of the year, he said.
Global holdings in exchange-traded products backed by gold dropped to 1,504.54 metric tons on Thursday, the lowest level since March 2009, data compiled by Bloomberg show.
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Bullion for immediate delivery was at US$1,080.97 ($1,527) an ounce at 4.00pm in Singapore from US$1,082.21 on Thursday, when prices gained 1.1% as the dollar fell, according to Bloomberg generic pricing. The metal is down 0.3% this week, heading for a fifth straight week of declines, after dropping on Wednesday to US$1,064.55, the lowest since February 2010.
Bullion investors are zeroing in on when higher US borrowing costs are likely to start rising as the metal doesn’t pay interest. The US central bank, which has held rates near zero since 2008, is contemplating lifting them as the job market heals and officials gain confidence that inflation will accelerate toward the Fed’s 2 percent goal. Policy makers next meet Dec. 15-16.
“US economic data and Fed officials have continued to support a rate rise in December,” Huatai Great Wall Futures Co. said in a note. “These expectations have been factored in by the market, supporting a short-term rebound in precious metals.”
The likelihood of higher rates by year-end is 66%, up from 50% at the end of October, futures data show. Fischer said Thursday the Fed has “done everything” it can to avoid surprising markets and governments when it moves. Spot silver fell 0.3%, while platinum and palladium rose.
“Gold is likely behaving as a technical play again, with US$1,080 as a handle market-watchers view as a ‘middle-ground’, a phenomenon of some pricing-in effect,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore, said by e-mail.
Gan said gold is still prey to “downside risk” if the Fed does move in December, potentially falling to US$1,050. If the rate increase fails to materialise, the metal could edge higher to US$1,200 through the end of the year, he said.
Global holdings in exchange-traded products backed by gold dropped to 1,504.54 metric tons on Thursday, the lowest level since March 2009, data compiled by Bloomberg show.
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