The Bull

Monday 18

February, 2019 5:47 AM



Gold dips on rate hike views; palladium up

Gold dips on rate hike views; palladium up

Palladium surpassed the bullion for the first time in about 16 years as higher speculative interest and larger supply deficit boosts the auto-catalyst metal.

Share |

By AAP 06.12.2018 07:48 AM

Gold has slipped on expectations of more interest rate hikes following remarks from a US Federal Reserve official and as some investors booked profits after prices hit their highest in more than five weeks.

Palladium, on the other hand, surpassed the bullion for the first time in about 16 years, to hit a new record high of $US1,263.56 per ounce as higher speculative interest and larger supply deficit boosted the auto-catalyst metal.

Spot gold was down 0.2 per cent at $US1,236.11 per ounce.

US gold futures settled down $US4, or 0.3 per cent, at $US1,242.60.

"It's just the lack of interest in gold at the moment. Most of the interest is in the bond market," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, adding that investors were also locking in profits after Tuesday's gains.

Gold rose to its highest since October 26 at $US1,241.86 on Tuesday, helped by a softer dollar which has been pressured by concerns about weaker growth and bets that the US Federal Reserve would end its tightening campaign sooner than previously thought.

Fed Chairman Jerome Powell last Wednesday said US interest rates were nearing neutral levels, which markets interpreted that the central bank would slowdown the pace of rate hikes.

However, New York Fed President John Williams on Tuesday said the central bank should expect to continue raising interest rates "over the next year or so" even while it pays close attention to possible risks highlighted by financial markets.

"He is contradicting the Fed chairman. That caused some downward pressure on the metal," Pehowich said.

The central bank is widely expected to raise rates at its policy meeting on December 18 and 19 and investors are keeping a close eye on signals for the future path of interest rates next year.

"As long as the end of Fed interest rate hikes is still open, the gold price is likely to suffer repeated temporary setbacks," Commerzbank analysts said in a note.

Higher interest rates increase the opportunity cost of holding the non-yielding bullion.

Gold prices have fallen about 9 per cent from a peak in April when prices were trading around $US1,365 per ounce.

"The latest positioning data from the futures market show that there are extremely large speculative short positions in gold ... This shows that speculators have little faith in the upside potential for gold prices," ABN AMRO analyst Georgette Boele said in a note.

Platinum was down one per cent at $US795.80 per ounce after hitting at $US785, its lowest since September 12, earlier in the session.

"People are buying palladium and selling platinum as a hedge. They are thinking that palladium and platinum spread will continue to widen and that makes palladium an interesting investment," Pehowich said.

Spot silver fell 0.4 per cent to $US14.46 per ounce.

Archive
  • 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...

Markets
Index: Points Change Percent

PLEASE SUPPORT OUR SPONSORS, AUSTRALIA'S LEADING BROKERS:



© Copyright TheBull.com.au. All rights reserved.