On Tuesday, gold gained as the dollar softened after comments from an official from the New York Federal Reserve that any rise in interest rates should be performed carefully, while the US air strikes increased safe assets’ demand and global tensions.
William Dudley, New York Fed President downplayed the importance of the different projections for interest rates by the Fed members. Increase in interest rates is likely to hurt investments in bullion and other assets that do not bear interest.
According to Reuters, spot gold gained 1.6% to reach a high of $1,234.80 and was up 0.5% to $1,220.10 per ounce at 1422 GMT. It has reached the lowest from January 2 at $1,208.36 in the last session. Futures for gold rose $2.90 to $1,220.80 per ounce.
Andrey Kryuchenkov, VTB capital analyst said, “We have seen a pullback in the US dollar… we had a bit of a relief rally after the losses seen in the past few days, but I’m still not bullish on the market, although this may mean that prices may now consolidate at around $1,220/$1,230, rather than at the lows of $1,208.”
The Wall Street Journal quotes senior market strategist at Archer Financial Services LLC, Adam Klopfenstein as having said, “It’s not just dropping of the bombs; it’s people asking how will this play out that’s got them gravitating toward safe-haven assets.”
The dollar dropped 1% against the basket of leading currencies. On Monday, it had climbed to four-year high and pared gains after a caution by Dudley that the gains of the dollar might complicate the job of the Fed, which would hurt the performance of the US economy and push down inflation.
Robin Bhar, Societe Generale said, “The comments from Dudley have allowed gold to open steady, and then we have the air strikes in Syria so some geopolitical safe-haven buying.”
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