You are here

Gold snaps two-day rally as investors weigh outlook for economy

Friday, February 19, 2016 - 13:50

37408767.2 (37448832) - 12_02_2016 - AUSTRIA GOLD.jpg
Gold fell for the first time in three days as investors weighed losses in financial markets and crude oil against the outlook for the U.S. economy.

[SINGAPORE] Gold fell for the first time in three days as investors weighed losses in financial markets and crude oil against the outlook for the U.S. economy.

Bullion for immediate delivery dropped as much as 0.5 per cent to US$1,225.04 an ounce and traded at US$1,226.79 by 1:10 pm in Singapore, according to Bloomberg generic pricing.

The metal closed at US$1,230.87 on Thursday, climbing 1.9 per cent or US$22.37 an ounce. Gold is set for the first weekly drop in five after climbing to the highest level in a year on Feb 11.

"A jump of more than US$20 in just a day is quite attractive to take profit before the weekend," Tetsu Emori, president of Emori Capital Management Inc, said from Tokyo.

sentifi.com

Market voices on:

"People are quite nervous about the global financial markets and the economy and the money is probably heading to gold as a safe haven instead of risky assets such as equities. The gold market is still quite steady and supported by the slowdown in the global economy," he said.

Gold has surged 16 per cent in 2016 as investors pared down expectations for further increases in US borrowing costs and factored in negative interest rates in Japan and Europe, making traditional stores of value such as bullion more appealing.

Asian stocks dropped on Friday and crude prices retreated. Federal Reserve Bank of San Francisco president John Williams said on Thursday that the domestic US economy was strong and repeated that he expects the Fed to gradually normalize policy.

The top precious-metals forecaster as ranked by Bloomberg isn't convinced of gold's rally. Oversea-Chinese Banking Corp's economist Barnabas Gan increased his outlook for gold this year to a range of between US$1,000 and US$1,150 from a previous year-end prediction of US$950.

"The key factor underpinning our bearish view for gold prices will still be" the Fed's outlook for the interest rates, Mr Gan said in a report dated Feb 19.

BLOOMBERG

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom