Gold regains some ground

FE Team | Published: June 18, 2021 21:33:49

Gold prices rose 1.0 per cent on Friday as a pause in the dollar's rally helped bullion claw back some ground from a sharp slide in the previous sessions driven by the US Federal Reserve bank's hawkish tilt, which put it on course for its worst week in nearly nine months, reports Reuters.
Spot gold climbed to $1,790.59 per ounce by 0908 GMT on the day, but was down 4.5 per cent for the week. US gold futures gained 1.0 per cent to $1,791.70 per ounce.
There was some bargain-hunting after the sell-off and the dollar's rally has "stopped for a moment", helping gold rise, ABN Amro analyst Georgette Boele said.
But any uptick in gold is likely to be temporary with the dollar expected to go higher, Boele added.
Auto catalyst metal palladium gained 1.9 per cent to $2,545.18 per ounce on Friday but was on track for its worst week since March 2020 after shedding as much as 11 per cent on Thursday.
Silver rose 1.7 per cent to $26.36 but was down more than 5.0 per cent for the week. Platinum climbed about 2.0 per cent to $1,078.71.
The US Federal Reserve on Wednesday signalled it would be considering whether to taper its asset purchase programme meeting by meeting and brought forward projections for the first post-pandemic interest rate hikes into 2023.
The greenback jumped to a two-month high after the Fed comments, en route to its best week in nearly nine months.
Higher interest rates translate into higher opportunity cost of holding gold.
Gold's retreat below the key $1,800-per-ounce mark and other support levels, including the 100-day and 200-day moving averages, were further bearish technical signals, analysts said.
But "the reaction in gold has been somewhat overdone," said ED&F Man Capital Markets analyst Edward Meir.
"Despite the current high-growth, inflationary environment, the proposed Fed rate hikes are not expected to set in for at least another 18 months. So after a little bit more weakness here, gold will regroup and push higher," Meir added.