Singapore, March 10:
Gold was stuck near three-month lows on Tuesday on renewed expectations
of a mid-year hike in US interest rates and as the dollar scaled a fresh
11-year peak.
Spot gold was little changed at $1,166.66 an ounce by 0253 GMT, close to a three-month low of $1,163.45 reached on Friday.
Gold took a hit from Friday’s strong US non-farm payrolls data that
boosted expectations that the Federal Reserve would begin increasing
interest rates by the middle of the year.
The Fed, which has kept rates at near zero since December 2008, has
signalled that it is prepared to raise rates later this year, with June
to September the expected timeframe.
Higher rates could dent the demand for assets that do not pay interest
such as gold, and boost the dollar, which on Tuesday climbed to its
highest since September 2003 against a basket of major currencies,
denting bullion’s safe haven appeal.
“Gold will continue to be weighed down near term by the strong US payrolls from Friday,’’ said ANZ analyst Victor Thianpiriya.
Rate hike woes
Comments from a top Fed official added to worries over a rate hike.
Richard Fisher, president of the Dallas Federal Reserve Bank, said the
US central bank should promptly end its easy monetary policy and press
ahead with an interest rate hike.
Charts were also not in favour of gold, with technical analysts predicting the next support level for gold at $1,150.
Greek debt crisis
For further trading cues, investors were eyeing talks over the Greek
debt crisis, where prolonged uncertainty could help safe-haven bullion.
Finance experts from Greece will open talks about economic reforms on
Wednesday with officials from the European Union, the European Central
Bank and the International Monetary Fund.
The ECB's Governing Council is set to hold a teleconference on Thursday
to discuss extending emergency liquidity assistance for Greek banks.
“Unless the situation surrounding Greek’s debts take a huge turn for the
worse, the bearish sentiment engulfing gold currently will likely
triumph over any mild safe haven appeal the precious metal is
exhibiting,’’ said Howie Lee, analyst at Phillip Futures.
Investor positioning indicated a bearish outlook. Holdings of SPDR Gold
Trust, the world's largest gold-backed exchange-traded fund, fell 0.43
percent to 753.04 tonnes on Monday — their lowest in more than a month.(Business Line)
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