You are here

Gold struggles on stronger dollar, caution ahead of Fed

37512793 - 19_02_2016 - AUSTRALIA-GOLD_M&A.jpg
Gold struggled to recover from losses on Monday due to strength in the dollar and as investors took a cautious stance ahead of the Federal Reserve policy meeting later this week.

[SINGAPORE] Gold struggled to recover from losses on Monday due to strength in the dollar and as investors took a cautious stance ahead of the Federal Reserve policy meeting later this week.

Spot gold was little changed at US$1,231.20 an ounce by 0041 GMT, after dropping 1 per cent on Friday.

The US dollar rose to its highest level against the yen in three weeks on Friday after a report said the Bank of Japan is considering expanding its negative rate policy to bank loans and could cut rates further at its two-day policy review that ends on Wednesday.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

Investors will also be closely monitoring the US central bank's two-day policy meeting that concludes on Thursday.

The Fed, which lifted interest rates in December for the first time in nearly a decade, is not expected to raise rates at this week's meeting but markets will be looking for clues on when the next week could be.

A Reuters poll showed on Friday showed that economists expect the Fed to deliver a rate hike in June, and follow up with another by the end of this year. But interest rate futures and bond market traders show less conviction on a series of hikes this year, underscoring an ongoing wide gap between markets and policymakers on the trajectory of rates.

Spot silver firmed at US$16.986 an ounce, after jumping to its highest in 11 months last week.

Hedge funds and money managers raised their bullish position in COMEX silver contracts to a record high in the week to April 19 when prices surged to an 11-month peak, US Commodity Futures Trading Commission data showed on Friday.

They also increased their net long positions in gold futures and options to the highest in 3-1/2 years.

Gold demand in India improved last week as jewellery retailers reopened stores after a strike, but the world's second biggest bullion market remained at a discount to the global benchmark as purchases across the region were curbed by higher prices.

REUTERS

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes