Gold coasts along as stocks perk up, possible Fed hike delay supports

[MANILA] Gold steadied on Thursday after suffering its biggest fall in five weeks in the prior session as stock markets recovered, but indications that a US rate hike might happen later than expected kept a floor under prices.

Cheered by Wall Street's rebound, Asian stocks rose led by Chinese markets whose deep tumble this week fed a global rout. "Gold has been correlated a lot with stock markets in the past couple of days due to the fear globally," said Howie Lee, an analyst at Phillip Futures in Singapore. "It's not surprising to see gold come back off as stocks stabilise." Spot gold was up 0.2 per cent at US$1,127.35 an ounce by 0259 GMT, after dropping 1.3 per cent on Wednesday, its steepest decline since July 20.

Bullion fell to a one-week low of US$1,117.35 overnight, taking its losses this week to nearly 3 per cent.

US gold for December delivery edged up 0.2 per cent to US$1,127.10 an ounce.

Providing some support to gold were comments by New York Fed President William Dudley on Thursday that the prospect of a September rate increase looks "less compelling" given the threat posed to the US economy by recent market turmoil. "The world is in no state to endure a rate hike from the US at this point. It will just cause further collapse in the stock markets," said Mr Lee at Phillip Futures.

Gold is holding above US$1,100 support as US rate hike expectations this year slowly shift to December from next month, said Mr Lee. When those expectations were tilted towards September, bullion was closer to US$1,000, he said.

The precious metal is still up nearly 5 per cent from a 5-1/2-year low of US$1,077 reached in July, but has given up more than 3 percent since touching a seven-week top of US$1,168.40 last week. "Turmoil across global markets did little to bring people back to gold as investors ignored the metal's haven appeal and focused on the prospect of higher US interest rates," ANZ Bank said in a note.

Investors will be eyeing key US data tonight for more clues on the rate hike timing, including a second estimate for second-quarter gross domestic product and weekly jobless claims.

A Reuters poll showed that US second-quarter GDP growth would be revised up to 3.2 per cent from the 2.3 per cent advance estimate last month.

Other precious metals rebounded from this week's slide. Spot palladium rose 1.1 per cent to US$538.50 an ounce after falling to a near five-year low of US$518 and platinum climbed 1.3 per cent to US$990. Silver gained 0.6 per cent to US$14.19.

REUTERS