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Gold holds near 2-mth low on firm dollar

Monday, August 25 08:13:37

Gold edged down on Monday, hovering near its lowest in two months on a firmer U.S dollar and speculation of an eventual increase in U.S. interest rates that could hurt the metal's appeal as a hedge against inflation.

After falling nearly 2 percent last week, bullion attracted buying from jewellers in Asia, but the amount was limited and investors stayed on the sidelines. Despite the recent reversals, bullion is still up more than 6 percent this year.

Gold had slipped 0.30 percent to $1,277.00 by 0615 GMT, not far from a two-month low of $1,273.06 hit last week.

At a gathering of central bankers in Jackson Hole, Federal Reserve chair Janet Yellen nodded to the concerns of some Fed officials about the sustained level of monetary policy stimulus, even as she stressed the need to move cautiously on raising rate.

The Fed has said it would wait a "considerable time" after winding down a stimulative bond-buying program in October before raising rates. Financial markets currently expect a rate hike around the middle of next year.

Premiums for gold bars in Hong Kong stood at 70 cents to $1.10 to the spot London prices, higher than 50 to $1.00 quoted late last week because of purchases from jewellers.

In Singapore, premiums were steady at 80 cents to $1 an ounce to spot London prices.

"There's a bit of buying interest here too, but I guess some people are also waiting for more weakness in prices," said a dealer in Singapore.

U.S. gold was at $1,277.90 an ounce, down $2.30. Trading had stopped earlier because of a technical glitch.

In other markets, the dollar marched higher against the euro and yen as investors wagered that interest rates were set on a diverging course in the United States, Europe and Japan, giving a lift to Tokyo stocks in the process.

China's planned global gold exchange has signed up more members than targeted, as foreign banks and trading houses seek direct access to the world's top physical gold consumer and to test out reforms allowing them to trade commodities in the yuan currency. (Reuters)

For more visit: www.businessworld.ie