Mubasher: Gold prices edged up on Monday as the US dollar retreated on prospects that the US Federal Reserve would not hike interest rates this year.
This was accompanied by a slump in Asian equities after Chinese data showed weak exports and imports, pointing further to a slowdown in the world’s second-biggest economy.
By 8:24 am GMT, spot gold went up 0.22% to $1,293.08 per ounce, while US gold futures rose 0.28% to $1,293.10 per ounce.
Gold prices usually see gains on expectations of lower interest rates, as they reduce the opportunity cost of holding non-yielding bullions, while they rein in the demand for the dollar, making the precious metal more affordable to those holding other currencies.
The weakness in stocks and US dollar seemed to support gold, CMC Markets and Stockbroking chief strategist Michael McCarthy told Thomson Reuters.
The US dollar index, which tracks the greenback against six major peers, edged down 0.04% to 95.6290.
“The market feels there is a shift in the Fed’s stance and it is more accommodative and we are seeing the dollar weakening for several sessions,” McCarthy said.
The Fed could be patient on monetary policy, with stable price measures, the central bank chairman Jerome Powell said last week, downplaying expectations from policymakers which suggested that interest rates would be raised twice this year.
Moreover, the geopolitical risks started to fuel some safe-haven purchases, Australia and New Zealand (ANZ) bank said in a note.
While Brexit negotiations drove increasingly investor worries, it seems that no end for the US government shutdown in sight, the bank added.
UK Prime Minister Theresa May needs to win a vote in parliament on Tuesday to have its Brexit deal approved.
In the US, a government shutdown against the backdrop of President Donald Trump’s demand to build a wall on the borders with Mexico entered its 24th day on Monday.
“The market is cautious ahead of data flows that might revise the recent very dovish outlook,” ABC Bullion global general manager Nicholas Frappell told Reuters.
