Screen Shot 2017-06-22 at 12.18.56 PM

Gold rises as oil price slump boosts safe haven demand

BENGALURU – Gold prices rose for a second straight day on Thursday as risk averse sentiment amid weaker oil prices drove up the demand for the metal, with a softer dollar and weakness in US Treasury yields also lending support.

Spot gold rose 0.5% to $1 252.41/oz at 0812 GMT. It rose 0.3% in the previous session, its largest intraday percentage change since June 6.

US gold futures for August delivery rose 0.6% to $1 253.30/oz.

“A softer US dollar and a risk-off bias following the recent declines to crude saw gold turn higher during Asian hours on Thursday,” MKS PAMP trader Sam Laughlin said in a note.

Oil turned lower on Thursday after posting gains earlier in the session as traders look ready to test new lows for crude prices with worries persisting over a global glut. [O/R]

“The uncontrolled oil price spill in the futures markets may have seen some traders pushing the risk aversion button and buying gold,” said Jeffrey Halley, senior market analyst at Oanda.

“The primary driver appears to be the flattening of the longer-dated US Treasury curve.”

The US Treasury yield curve flattened to almost ten-year lows on Wednesday as investors evaluated the impact of hawkish Federal Reserve policy on the economy even as inflation measures are deteriorating.

US home resales unexpectedly rose in May to the third highest monthly level in a decade and a chronic inventory shortage pushed the median home price to an all-time high.

Gold is highly sensitive to rising rates and yields, which increase the opportunity cost of holding nonyielding assets such as bullion while boosting the dollar, in which it is priced.

“Investors are waiting for any clues on whether the timing of the next rate hike is September or December,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Spot gold may bounce more into a range of $1 257 to $1 261/oz, as it has cleared a resistance at $1 251 according to Reuters technical analyst Wang Tao.

The US dollar index, which measures the greenback against a basket of six currencies, retreated from a one-month high of 97.871 set on Tuesday.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.04% to 853.98 tonnes on Wednesday.

Among other precious metals, silver gained 1% to $16.61/oz. Platinum touched its highest in a week during the session and was up 0.6% to $929.20/oz, while palladium slipped 0.8% to $880.99/oz.

Source: engineeringnews

Recently Published

Utility Week

Expand your knowledge in over 40 conference sessions at African Utility Week and save money!

The largest group of power, energy and water professionals will ...


The 20th Anniversary Challenge of The Workplace Challenge

Vania Reyneke, Project Manager, The Green Economy Journal attended ...


Sustainability in building design has won Renée Minnaar of the University of Pretoria a place at 31st Corobrik Architectural Student of the Year Awards

Sustainable building demands architectural design that aims to ...


Countdown continues to world’s first ever Global Recycling Day as worldwide events are announced

With just one month to go until the first-ever Global Recycling Day, ...

Rose Foundation

ROSE Foundation – protecting our dwindling water resources

There are many reasons that attribute to the growing water crisis in ...


Growthpoint becomes the first company to issue a Green Bond on the JSE

Growthpoint Properties is the first South African company to issue a ...


Durban woman director to Put Foot for charity

Courageous business woman and director, Karen Petersen, is swapping ...


Innovation and an appreciation of South Africa’s cultural diversity stand out in The University of the Free State, Corobrik Architectural Student of the Year Awards

Innovation is the standout quality that differentiates design ...


#movethedate of Earth Overshoot Day

Humanity demands more than Earth can regenerate Calculate your ...