The Bull

Monday 18

February, 2019 5:37 AM

Gold pares gains with rate hike imminent

Gold pares gains with rate hike imminent

Gold held steady but pared some gains as minutes from the US Federal Reserve's recent meeting showed an interest rate hike was imminent.

Share |

By AAP 30.11.2018 07:50 AM

Gold held steady but pared some gains as the dollar recovered and minutes from the US Federal Reserve's recent meeting showed an interest rate hike was imminent in December.

Spot gold rose 0.2 per cent to $US1,223.75 per ounce, having earlier hit its highest since November 22 at $US1,228.96.

US gold futures settled up barely changed at $US1,224.10.

Minutes from the Fed's November 7 to 8 meeting showed that almost all Fed officials at their last meeting agreed another interest rate increase was "likely to be warranted fairly soon," but also opened debate on when to pause further hikes and how to relay those plans to the public.

"The rate hike is still ahead of us and that is a temporary headwind for gold," said George Gero, managing director at RBC Wealth Management.

"The stock market firming is supporting the dollar, which is not good for gold."

The Fed has raised rates three times this year.

Higher rates also increase the opportunity cost of holding gold, which does not pay interest.

Gold jumped on Wednesday after Powell said the central bank's policy rate is "just below" estimates of a level that neither brakes nor boosts a healthy US economy.

Many investors read the remarks as an indication that the Fed could tone down its aggressive monetary policy.

"Geopolitical risk between Russia and Ukraine is going to cause investors to move into the gold market as well. We could see another conflict arise, a much more aggressive one than what we saw previously with Crimea," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.

Days after Russia seized Ukrainian vessels and their crews near Crimea, the Ukrainian region which Moscow annexed in 2014, German Chancellor Angela Merkel said the West was imposing sanctions on Russia to stand up for international law.

Gold is traditionally viewed as a safe investment during economic and political uncertainty.

However, bullion has largely lost out to the dollar this year as investors sought refuge in the greenback as the US-China trade war unfolded against a backdrop of rising interest rates.

Investors are now closely watching the upcoming meeting of Chinese and US leaders at the G20 summit in Argentina.

Among other precious metals, Palladium fell 0.5 per cent to $US1,178 per ounce, moving away from a record peak of $US1,186.50 scaled earlier in the session.

Spot silver was steady at $US14.31 an ounce.

Platinum dipped 0.2 per cent to $US819, having slipped to a seven-week intraday low of $US809.50 on Wednesday.

  • Trump to get update on China trade talks

    US duties on $US200 billion worth of Chinese imports are set to rise to 25 per cent from 10 per cent if no deal is reached by March 1 to address US demands

  • SA govt unveils Repat Hospital plan

    The South Australian government has unveiled its master plan to redevelop Adelaide's Repatriation Hospital.

  • US-China talks to boost Aussie market

    Australia's share market is tipped to open higher on Monday after optimism surrounding US and China trade talks.

  • The Week Ahead

    In Australia, the December quarter Wage Price Index release dominates the local agenda in the coming week.

  • ASX closes flat as more companies report

    The Australian sharemarket has managed to finish in positive territory as more companies reported earnings results.

  • Stocks to watch

    Stocks of interest at the close of trade on the ASX on Thursday, February 14.

  • Germany to let NATO use its cyber skills

    Germany is to join the ranks of NATO countries making its cyber warfare skills available to the alliance to help fight hacking and electronic warfare, officials said on Thursday.

  • Domain posts $156.4m loss as listings fall

    Domain's first-half loss has widened to $156.4 million after Sydney and Melbourne's stumbling property markets forced it to take a large non-cash impairment.

  • Farmer denies scaring vegans with gunshot

    A WA farmer who asked vegans to stop filming calves on his property and leave, then fired a shot into farmland, says he wasn't trying to scare them.

  • CommSec Daily Report Friday

    The local sharemarket is mostly flat so far in a choppy session of trade. The ASX 200 is marginally higher by 6 points or 0.1% to 6066 points towards lunch after trading in a narrow 18 point band...

Index: Points Change Percent


© Copyright All rights reserved.