Economic news

Gold Firms as Softer Dollar, Evergrande Woes Lift Appeal

* UBS sees gold price at $1,600/oz by mid-2022

* Platinum heads for biggest weekly gain in six 

Sept 24 (Reuters) - Gold prices bounced off 1-1/2-month lows on Friday, buoyed by safe-haven demand as investors grew wary over cash-strapped China Evergrande’s fate while a softer dollar also lifted the metal’s allure for holders of other currencies.

Spot gold was up 0.6% to $1,753.50 per ounce by 659 GMT. Prices hit their lowest level since Aug. 11 at $1,737.46 on Thursday. U.S. gold futures rose 0.3% to $1,754.40.

The dollar index lingered near a one-week low touched on Thursday.

“Asian investors could be building gold to protect against undesirable developments in the Evergrande saga over the weekend,” said Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA, adding the metal was likely to trade in a $1,740-$1,780 range in the near term.

Asian stock markets were on edge, hurt by persistent uncertainty around the fate of debt-ridden China Evergrande .

Peter Fung, head of dealing at Wing Fung Precious Metals, said uncertainty around Evergrande’s debt also spurred demand for physical gold in top consumer China, near the $1,750 level.

However, bullion prices were expected to come under pressure in the medium term with major central banks signalling tapering of pandemic-era stimulus, analysts said.

The U.S. Federal Reserve signalled an earlier-than-expected rate hike this week.

“We anticipate greater outflows from ETFs and non-commercial gold futures,” UBS wrote in a note, adding it expected gold prices at $1,600 by mid-2022.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to the lowest level since April 2020 on Thursday.

Silver climbed 0.9% to $22.68 per ounce and was up 1.2% for the week so far.

Palladium rose 1.1% to $2,005.68 but was on track for a third straight weekly decline.

Platinum slipped 0.7% to $982.50. The metal, however, was headed for a weekly gain of about 4%, its biggest in six weeks.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich, Sherry Jacob-Phillips and Subhranshu Sahu)

Source: Reuters


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