Tuesday, October 19

Gold prices firm as soft dollar, Evergrande crisis lift safe-haven appeal

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Gold prices firmed on Friday after falling 1% in the previous session, as concerns over China Evergrande’s debt woes drove some investors towards safe-haven bullion while a weaker dollar also lifted the metal’s allure for holders of other currencies.

Spot gold was up 0.6% at $1,752.20 per ounce, as of 0349 GMT, after hitting its lowest since Aug. 11 at $1,737.46 on Thursday. US gold futures rose 0.1% to $1,752.00.

But, US Federal Reserve’s signal on an earlier-than-expected rate hike kept gold prices on track for a weekly decline.


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A hike in interest rates translate to higher opportunity cost of holding non-yielding bullion.

“Asian investors could be building gold to protect against undesirable developments in the Evergrande saga over the weekend,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA said, adding that gold is likely to trade in a $1,740-$1,780 range in the near-term.

Though risk appetite drove gains on the Wall Street, Asian stock markets were on edge as investors fretted over the fate of debt-laden property developer China Evergrande as an interest payment deadline approached.

Meanwhile, the dollar index languished near a one-week low touched on Thursday.

“With global central banks pretty much committing now to a dynamic taper that brings forward rate hikes and that should ultimately be negative for gold,” Stephen Innes, managing partner at SPI Asset Management said.


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The Bank of England said on Thursday the case for higher interest rates “appeared to have strengthened.”

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.8% to 992.65 tonnes on Thursday from 1,000.79 tonnes on Wednesday.

Silver climbed 0.8% to $22.67 per ounce and was up 1.2% for the week so far.

Palladium rose 0.7% to $1,996.94, though was on track for a third straight weekly decline.

Platinum slipped 0.7% to $982.47. The metal, however, was headed for a 4.3% weekly gain, its biggest in six weeks. (Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)


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