Mubasher: Gold prices declined on Friday as investors took advantage of the bullion’s nearly six-year peak to book profits, as the US Federal Reserve conveyed a dovish stance on monetary policy, while tensions brewed again in the Middle East, Reuters said.
By 9:14 am GMT, spot gold fell by 0.53% to $1,438.49 per ounce, after exceeding $1,452.60 per ounce in early trading, its highest since May 2013, whereas US gold futures climbed by 0.85% to $1,440.30 per ounce.
“Gold is trading above $1,400, we are nowhere near threatening to go back to $1,360 or $1,375, and there is so much buying going on,” Vanguard Markets managing partner Stephen Innes was quoted by Reuters.
New York Fed president, John Williams, on late Thursday said that more stimulus measures were required earlier to address lower inflation when interest rates are close to zero, while it was not possible to wait for the advent of an economic disaster.
Williams’ remarks came as a virtual confirmation that the Fed would slash interest rates by 25 basis points (bps) at its two-day meeting on 30 and 31 July, while they even sharpened the case for a deeper 50 bps cut.
As a result, the dollar dropped to nearly two-week trough on Thursday, before holding some ground in early Asian trading.
At 9:12 am GMT, the US dollar index, which gauges the greenback against a basket of six major rivals, rose by 0.16% to 96.95.
Moreover, the uncertain situation in the Middle East also gave a push to gold’s safe-haven appeal.
Washington on Thursday announced that US Navy vessel downed an Iranian drone in the strategic Strait of Hormuz after the aircraft threatened the ship, yet Tehran denied any knowledge of losing a drone.
“The extra push for gold prices came from comments by Williams which implied quite aggressive rate-cutting, plus the Iranian drone news and the seizure of a tanker by the Iranians in the Straits of Hormuz,” ABC Bullion global general manager Nicholas Frappell was quoted by the news agency.