Gold rose to an almost three-week high on Tuesday as the US dollar retreated from multi-month highs and physical demand rose before India's late-October festival season. The US dollar slipped from a nearly eight-month high against the euro and a roughly three-month peak against the Japanese yen after comments from Bank of England Governor Mark Carney dampened expectations for more monetary stimulus in Europe.
Gold is a traditional gift during two of the most important Hindu festivals, Dhanteras and Diwali, which will be celebrated at the end of the month. Spot gold was up 0.9 percent at $1,275.11 an ounce by 3:07 pm EDT (1907 GMT), after rising to $1276.67, the highest since October 5. China accounts for about 27 percent of global demand, and India for 24 percent, Citi Research analysts said in a note, citing World Gold Council estimates.
"As such, the geography of global gold demand has shifted from West to East and ... Asian countries will remain firmly in the driving seat in terms of consumer demand in particular," Citi Research said. US gold futures settled up 0.8 percent at $1,273.60 an ounce. Still, markets were cautious, trading gold in narrow ranges, as comments by Chicago Fed President Charles Evans on Monday and upbeat US economic data raised expectations for an interest rate hike later this year.
Bullion is highly sensitive to rising US rates, which lift the opportunity cost of holding non-yielding assets while boosting the dollar. Evans said the US central bank would raise its policy rate three more times by the end of next year if inflation expectations and the labour market continued to improve. "We need to monitor economic data ahead of the Fed's decision because it's an ongoing battle between the hawks and the doves right now and also how to interpret the data," Danske Bank senior analyst Jens Pedersen said.
In technicals, support for gold appears to be between $1,250 and $1,260, which restricts downside moves, MKS Pamp said in a note. Silver was up 1 percent at $17.73 an ounce. It touched a more than two-week high of $17.88 on Monday. Platinum was up about 3 percent at $964.60 an ounce after hitting a two-week high of $967.40, while palladium was up 0.5 percent at $634.
Comments
Comments are closed.