Wednesday, October 5

Gold hits over 1-week high as dollar weakens


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Gold prices touched a more than one-week

high on Monday, as an easing dollar continued to support

greenback-priced bullion, although higher US Treasury yields

capped gains.

Spot gold rose 0.2% to $1,848.96 per ounce, by 0201

GMT. Prices hit their highest since May 12 at $1,853.55 earlier

in the session.

US gold futures gained 0.4% to $1,847.90.

“The jury is still out as to whether gold has weathered the

storm in the medium term, or is (it) merely rallying in response

to a sustained pullback by the US dollar,” OANDA senior

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analyst Jeffrey Halley said.

The dollar index began the week on the back foot,

following its first weekly loss in nearly two months, as

investors cut bets on more dollar gains from rising US rates

and hoped that easing lockdowns in China can aid global growth.

A weaker dollar makes bullion more attractive for overseas

buyers.

“Before turning structurally bullish, I would need to see

gold hold onto its recent gains in the face of dollar strength,

and not dollar weakness,” Halley said.

Benchmark US 10-year Treasury yields, however, firmed

after a three-session losing streak, limiting demand for

zero-yield gold.

St. Louis Federal Reserve Bank President James Bullard

reiterated his view last week that the US central bank ought

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to raise interest rates to 3.5% this year to get high inflation

more quickly under control.

Bullion, seen as a safe store of value during times of

economic crises, tends to become less attractive to investors

when US interest rates are raised because it yields no

interest.

Reflecting sentiment, SPDR Gold Trust , the world’s

largest gold-backed exchange-traded fund, said its holdings rose

0.69% to 1,063.43 tonnes on Friday from 1,056.18 tonnes on

Thursday.

Spot silver gained 0.4% to $21.84 per ounce, platinum

firmed 0.3% to $958.10, and palladium climbed 0.7%

to $1,978.45.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Uttaresh.V)

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