LONDON: Gold prices rose yesterday, rebounding after posting its biggest quarterly loss on record, as the dollar steadied ahead of a raft of data this week which traders hope will give more clues on the outlook for US stimulus measures.
Speculation that the Federal Reserve will rein in its $85bn monthly bond purchase programme led gold to fall to its lowest in nearly three years last week.
Investor confidence in the metal has been eroded — gold plunged 23 percent in the second quarter — by rising talk of an end to the Fed’s ultra-loose monetary policy, which would support a rise in interest rates, making gold less attractive.
Spot gold was up 0.3 percent to $1,237.24 by 1412 GMT, well off Friday’s near three-year low of $1,180.71. Comex gold futures for August delivery were up 1.2 percent at $1,237.90.
“This (bounce) would be an expected reaction to the retreat last week with some buying emerging near three-year lows,” Andrey Kryuchenkov, an analyst at VTB Capital, said. “I don’t think it’s sustainable while volumes remain relatively low.”
“I doubt there will be a lot of bargain hunting given a whole array of macro numbers this week, including the ECB statement (and with) non-farms in focus,” he added. “The market is putting extra weight on US economic releases.”
A strong reading in Friday’s US payrolls report would likely lift both Treasury yields and the dollar, and depress gold. The European Central Bank’s policy meeting on Thursday is likely to emphasise that the euro zone economy is in a different stage of recovery than the United States.
The dollar index retreated from a four-week peak hit on Friday. European equities rose 1.2 percent, adding to their gains after data showed US manufacturing activity grew a touch above of expectations in June.
Holdings of gold exchange-traded funds (ETFs) have fallen this year, with outflows exacerbated by the recent price drop.
Reuters
