- December 19, 2018
- Posted in LOCAL
Gold rose to a one-week high yesterday, helped by a weaker US dollar and a fall in global stock markets, but moves were limited as investors sought clarity on the path of U.S. interest rates as concerns about a slowing global economy deepened.
Spot gold was up 0,1 percent at $1,247.06 per ounce at 1310 GMT, having earlier touched its highest since December 10 at $1,250.27, just short of a five-month peak of $1,250.55 hit last week. US gold futures were steady at $1,251.30 per ounce.
“There has been a slight increase in the minority view that the Fed might not raise rates, given the recent weakness in the equity markets. It would be quite a shock if they didn’t increase rates in this week’s meeting,” said Capital Economics analyst Ross Strachan.
“Most of the attention will be on how many more interest rates rises there may be next year.”
The Fed is widely expected to raise interest rates for the fourth time this year at its two-day policy meeting ending on Wednesday. But weak stock markets and slowing global growth may prompt the central bank to signal a slowdown in rate increases.
“We have seen quite a broad-based sell-off across many other markets, from equities to other commodity markets, and an increase in risk aversion. In that climate, gold is edging gradually higher towards a multi-months peak,” Strachan said.
World stock markets tumbled as fears about a slowing global economy gripped investors, while the dollar index slipped 0,3 percent against a basket of major currencies. Gold tends to gain when interest rate hike expectations ease because lower rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, in which it is priced.
In euro terms, gold reached its highest since June at 1 100,57 euro an ounce. —Reuters.