Gold Rebounds but Headed for Worst Week


Gold Rebounds but Headed for Worst Week

Gold was headed for the largest weekly drop in two months despite edging higher on Friday, a day after a 2% drop on expectations for a US interest rate rise.

On Thursday, investors took some profits on concern that the strong gains in January might not be sustained.

Spot gold rose 0.6% at $1,263.35 per ounce and US gold futures for February delivery rose $6 to $1,261, as reported by CNBC.

So far, gold is up 6.7% for the month on uncertainty over European stability, after the Swiss National Bank scrapped the franc’s peg to the single currency and the European Central Bank said it would pump billions into the economy.

Despite the lower prices, appetite for gold in Asia remained muted.

Reuters quoted Julius Baer analyst Carsten Menke as having said, “We’ve seen these sentiment-driven recoveries in the gold market a couple of times in the past two years, with the start of last year being one example, when it got support from the Ukraine crisis, before fading. We think this is very much comparable to what we saw last year.”

He added, “We’re expecting the first interest rate hike early in the Q4, in October. That’s when we think there will be more pressure on gold, because people realize that the interest rate cycle is moving against them.”

In a note, the UBS said on Friday that the recent weakness across the precious metals is likely being driven by long liquidation since participants are looking to square positions and book profits before the close of the month.

Silver was lower 0.5% at $16.83 per ounce. Spot platinum dropped 0.3% at $1,216.55 per ounce, while spot palladium declined 0.5% at $768.72 per ounce.

To contact the reporter of the story: Jonathan Millet at