Gold price boosted by geopolitical ripples but interest-rate outlook limits gain
London (Mar 6) Gold got an early-week bounce as geopolitics had the dollar sputtering Monday and left haven assets, including the precious metal, in higher demand.
North Korean sabre-rattling, China’s trimmed GDP estimate, U.S. President Donald Trump accusing Obama of pre-election wiretapping and the persistence of troubled French presidential candidate Francois Fillon fueling political uncertainty there all combined to largely push down the greenback and bring at Gold for April delivery GCJ7, +0.48% rose $5.10, or 0.4%, to $1,231.50 an ounce. Gold’s finish at $1,226.50 an ounce Friday was the lowest finish since Feb. 14, according to FactSet data.
The ICE Dollar Index DXY, +0.21% , which measures the currency against a basket of six currencies, was little changed Monday after trading at a two-month high late last week. But the dollar fell against its biggest rivals, including the Japanese yen USDJPY, -0.21% .
Gold futures logged a more than 2% decline last week, snapping a string of four-straight weekly wins, after U.S. Federal Reserve Chairwoman Janet Yellen said an interest-rate increase was likely to be announced at the central bank’s next meeting March 14-15. Recent hints from other Fed officials had already raised expectations for rate hike, feeding strength in the dollar and pressuring dollar-denominated prices for gold to start March.
“The gold price is being kept in check by the probably imminent rate hike in the U.S.,” said commodities analyst Carsten Fritsch and team at Commerzbank in a note. “According to the Fed fund futures, the market has now almost completely priced this rate hike in. However, Yellen also made it clear that the forthcoming increase should not be misinterpreted as signalling a generally faster cycle of rate hikes.”
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Yellen’s speech was “enough to prompt ten tons of gold to be withdrawn from the gold ETFs on Friday. This was the first outflow in a good two weeks, as well as the biggest since mid-December,” said Fritsch.
Traditionally, higher Fed interest rates can make the U.S. dollar strengthen, weighing on prices for gold, which is primarily traded in the greenback.
In other trading, May silver SIK7, +0.76% rose 11 cents, or 0.6%, to $17.84 an ounce. Prices for the contract tallied a loss of 3.6% last week.
Among exchange-traded funds, the SPDR Gold Trust GLD, -0.06% was little moved premarket after a 2% weekly loss. The miners-focused VanEck Vectors Gold Miners ETF GDX, +1.23% fell 0.3%, while the iShares Silver Trust SLV, +1.07% eased 0.5%.
Source: MarketWatch
