Gold prices rebounded on Wednesday from a more than one-week low hit in the last session, supported by a softer dollar, even as easing geopolitical tensions, which would typically dampen gold’s safe-haven appeal, failed to curb its momentum.
Spot gold jumped 0.7 per cent to $2,651.27 per ounce, as of 09:13 a.m. ET (1413 GMT). US gold futures rose 1.1 per cent to $2,650.30.
The rebound followed a dramatic $100 plunge on Monday, marking gold’s sharpest one-day drop in over five months, as safe-haven demand waned following the announcement of a long-negotiated ceasefire between Israel and Lebanon’s Hezbollah.
Prices fell to their lowest level since November 18 in the previous session.
“It appears as if the effect of a softer US dollar has been supporting gold prices in today’s session,” said Hamad Hussain, Assistant Climate and Commodities Economist at Capital Economics.
The dollar index slipped 0.8 per cent, hitting a 1-week low boosting gold’s appeal for holders of other currencies.
“Taking a step back from today’s price movements, greater volatility could be in store for gold prices in the near term ahead of Donald Trump’s inauguration and as the situation in the Middle East develops.”
US president-elect Donald Trump on Monday pledged to slap tariffs on Canada, Mexico and China, the United States’ three largest trading partners, leaving investors cautious.
There was uncertainty about the direction of the economy, as noted by Fed officials in the minutes released on Tuesday.
A weekly report on jobless claims showed many laid-off workers are experiencing long bouts of joblessness, keeping the door open to another interest rate cut from the Federal Reserve in December.
Markets now see a 67 per cent chance of a quarter-point rate cut in December. The non-yielding bullion tends to shine in a lower-interest-rate environment.
Spot silver rose 0.2 per cent to $30.47 per ounce, platinum added 0.3 per cent to $930.75 and palladium was steady at $977.54.
Source: www.khaleejtimes.com