LONDON. – Gold rose yesterday as a retreat in the dollar from 12-year highs arrested an eight-session slide, but expectations that US interest rates will rise sooner rather than later kept prices under pressure. Spot gold was at $1,160.40 an ounce at 10.38am GMT, up 0,5 percent, after rising 1 percent to a session high at $1 166,30. US gold futures for April delivery were up $9,10 per ounce at $1 159,70. Gold fell to its lowest since December 1 on Wednesday at $1 147,10 per ounce in an eighth session of losses, its longest drop since March 2009. That was largely driven by a rally in the dollar to 12-year highs against the euro, as the European Central Bank launched a €1-trillion bond-buying campaign, and after robust employment data from the US last week.
“Gold prices are up a little today because the dollar is weakening,” Natixis analyst Bernard Dahdah said.
“The dollar has been the major driver of the price of gold . . . This will be the classic story for 2015. The closer we get to higher interest rates, the stronger the dollar will be.”
Euro-denominated gold underperformed to ease 0,1 percent after reaching a one-month high at €1 103,91 per ounce. A sell-off in the euro paused, with the single currency rising against the dollar for the first time in two weeks. – Reuters.
The euro is down 12 percent against the dollar this year as monetary policy at the ECB and US Federal Reserve diverges, with the ECB launching quantitative easing as the Fed prepares for its first rate rise in almost a decade.
Traders are awaiting US retail sales data later in the day to see whether the figures can reinforce expectations of an interest rate increase by the Fed by mid-year.
“The economic figures due to be published today in the US could generate further movement on the gold market via the EUR/USD exchange rate,” Commerzbank said in a note.
Investors have been pulling out of bullion, given the bullish outlook for the dollar. SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, saw its holdings drop to the lowest in more than a month this week.
Silver was up 1,2 percent at $15,64 per ounce, while spot platinum was up 1,1 percent at $1 128,15 per ounce and spot palladium was up 0,9 percent at $793,65 per ounce.-Reuters