Gold rises after reaching a 10 month low as dollar dips

Market - Himanshu Gill - Dec 05,2016

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gold rises after reaching a 10 month low as dollar dips

Gold recovered slightly on Friday after reaching its lowest level since early February, suffering three sessions of losses majorly because of the sink is dollar’s value.

The growing odds on a hike in the interest rate by the US Federal Reserve has capped gains of the dollar. Spot gold was up by 0.25 per cent at $1,175.36 an ounce by 0711 GMT. Gold had hit its lowest since Feb. 5 at $1,163.45 earlier in the year. The value was trading down at 0.8 percent this week.

US gold futures rose about 0.5 per cent to $1,175.30 per ounce. The dollar index, which measures the dollar against a basket of major currencies, eased 0.3 per cent to 100.770.

The dollar has scaled back from nearly a 14-year high of 102.05 that it hit on November 24 supplemented with a surge in U.S. Treasury yields due to expectations of higher fiscal impulse and faster pace of monetary tightening under president-elect Donald Trump.

Since then, several Fed policymakers have expressed confidence in the U.S. economy and signaled for a possibility of an interest rate hike in December, the first in past one year. Gold is highly sensitive to rising interest rates as they increase the opportunity of holding onto stocks of gold, while surging the dollar’s value. With the increase in interest rates almost certain, dollar is bound to remain strong while putting pressure on gold.

SPDR Gold Trust, holder of the largest gold-backed exchange-traded fund, fell by 1.54 percent to 870.22 tonnes on Thursday. It has fallen over 6 percent last month.

Silver rates fell 1.2 percent to $16.31 an ounce, while platinum dipped by 0.3 percent to $911.50. Palladium also dipped 2 percent to $735.20, which touched its highest value since June 2015 at %774.60 but has remained unmoved since the past five weeks.