US MIDDAY: gold climbs

Gold rose more than 1 percent on Thursday as the Bank of Japan held off from expanding monetary stimulus, boosting the yen versus the US dollar, and after the Federal Reserve signalled it was in no rush to tighten monetary policy. The Fed left interest rates unchanged after its latest meeting on Wednesday and, while keeping the door open to a hike in June, showed little sign it was in a hurry to tighten policy amid an apparent slowdown in the US economy.
Spot gold was up 1.6 percent at $1,266.50 an ounce at 2:43 pm EDT (1843 GMT), a one-week high, while US gold futures for May delivery settled up 1.3 percent at $1,265.50 an ounce. "The Fed in the end was dovish when a slightly more hawkish message was expected, so that was supportive for gold, while the Bank of Japan clearly wrong-footed the market," Societe Generale analyst Robin Bhar said.
German bond yields fell as relief spread across markets that the Fed had not strongly signalled that it would raise interest rates in June, while the dollar slid against a basket of currencies. The US currency came under further pressure after the Bank of Japan defied market expectations for more monetary stimulus, boosting the yen. US short-term interest rate futures reflect the expectation the Fed will wait until September before raising rates.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. After three straight years of losses, analysts are finally prepared to say gold prices have found a floor, with rising prices seen this year and next as concerns over the pace of US monetary policy tightening fade.
RBC Capital Markets, however, said on Thursday "the lack of physical follow-through is a fundamental reason for why we think sustained gold bulls will be disappointed by year-end. Absent a large and unforeseen risk-off move driving gold higher, we think that prices likely have already peaked this year." Silver was up 2 percent at $17.56 an ounce. "Despite the gold-silver ratio having fallen to 72, silver remains a compelling buy at these levels and will likely continue to be the surprise outperformer in 2016," said Mark O'Byrne, research director of bullion dealer GoldCore in Dublin. Spot platinum was up 2.5 percent at $1,044.90 an ounce, after rising to the highest since July at $1,049.93 an ounce. Palladium was up 2.4 at $621.75 an ounce, after reaching $626.29, the highest since November.