Spot gold hits 4-week low

24/03/2016 07:29 AST

Spot gold fell more than two percent to its lowest in four weeks on Wednesday as the dollar strengthened following hawkish comments by Federal Reserve officials on the path of US interest rates.

Gold had risen 1.2 percent in the previous session, when investors sought “safe haven” assets after deadly bomb attacks on Brussels, before giving up its gains.

Spot gold slipped 2.6 percent to its lowest since Feb. 29 at $1,215.10 an ounce in earlier trade and was down 2.4 percent at $1,217.96 by 1520 GMT. Prices fell as investors booked profits ahead of the Easter break, which starts on Friday.

“After the news of Brussels, markets had a strong rally, but with the long weekend approaching there is some liquidation, likely to continue for the next few hours,” MKS SA head of trading Afshin Nabavi said.

US gold futures also fell 2.4 percent to $1,218.30 an ounce. Comments from several US Federal Reserve officials underpinned the dollar, which was up 0.5 percent against a basket of currencies.

Philadelphia Fed President Patrick Harker said the central bank should consider another hike as early as next month if the US economy continues to improve, while Chicago Fed President Charles Evans also said he expects two more rate increases this year.

“The Fed (officials) comments put a bit of pressure on the gold price but are unlikely to derail a more positive long-term sentiment toward the metal,” ABN Amro Georgette Boele said. “If there was a massive rate hike and a jump in the dollar, it would be very difficult for gold to move higher, but any rate increase will be gradual.”

Higher interest rates increase holding costs of gold, which is a non-interest bearing asset. Bullion has rallied 16 percent this year, regaining its role as a shelter for risk-averse investors, in the face of tumbling equities and fears of a global economic slowdown. Venezuela exported about 443 million Swiss francs ($456 million) worth of gold to Switzerland in February, data showed on Tuesday, as the South American country’s central bank carried out swaps to receive cash due to a biting economic crisis.

Switzerland became a net importer of platinum once again in February, data from the Swiss customs bureau showed on Tuesday, as shipments from major producer South Africa ticked up.

Silver fell 3.7 percent to $15.26 an ounce, platinum dropped 3 percent to a one-week low of $954.75 an ounce and palladium dipped 3.6 percent to $581.10 an ounce.

Arab News