Economic news

Gold Set for Weekly Gain as Fed Stays Patient on Rate Hikes

* Investors focus on U.S. nonfarm payrolls due later in the day

* Palladium set for 1st weekly rise in four

* Gold prices should retreat in 2022 as economy recovers- ANZ

Nov 5 (Reuters) - Gold prices were on track for a weekly gain on Friday, supported by the U.S. Federal Reserve’s decision to not rush into raising interest rates, which also weakened bond yields.

Spot gold rose 0.1% to $1,793.63 per ounce by 0419 GMT, and was up 0.7% so far in the week. U.S. gold futures gained 0.1% to $1,794.40.

The Fed said on Wednesday it will begin paring its monthly bond purchases with plans to end them in 2022, but stuck to its long-held view that high inflation would prove “transitory” and likely not require a fast rise in interest rates.

The announcement prompted benchmark 10-year U.S. Treasury yields to pull back from recent highs of around 1.6%.

Given the Fed’s view and ongoing inflationary pressures, gold should find some support at current levels, ANZ analysts said in a note.

“Still, we expect prices to retreat in 2022 as economic recovery develops,” they said.

The Bank of England also kept interest rates on hold on Thursday, wrong-footing investors who had been convinced it would raise borrowing costs.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

“A lot of investors’ interest is still mainly in equity markets and until gold breaks above $1,835, it might not have enough momentum to attract strong interest,” said Nicholas Frappell, global general manager at ABC Bullion.

MSCI’s gauge of stocks across the world hit a new all-time high on Friday.

Investors now eye U.S. nonfarm payrolls data due later on Friday to gauge the health of the labor market and how that might influence the Fed’s outlook on rates.

Spot silver rose 0.2% to $23.82 per ounce and platinum gained 0.4% to $1,029.70.

Palladium climbed 1.5% to $2,030.65 and was on course for its first weekly gain in four.

(Reporting by Nakul Iyer in Bengaluru; Editing by Sherry Jacob-Phillips and Ramakrishnan M.)

Source: Reuters


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