Gold hits three-and-a-half month high

Business Saturday 25/February/2017 16:55 PM
By: Times News Service
Gold hits three-and-a-half month high

London: Gold hit its highest in about three-and-a-half months on Friday as the dollar headed for its first week of decline in three after the new US finance chief poured cold water on the "Trumpflation trade" that had boosted the greenback this year. Treasury Secretary Steven Mnuchin said on Thursday that any steps US President Donald Trump's administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August. The comments suggested much work was still needed on the sweeping tax-reform plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this year.
"We've got a vacuum of (US domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world ... all helping gold," ICBC Standard Bank analyst Tom Kendall said. "There is apparently a move of institutional investor money into gold and there are usually very good reasons for that."
Spot gold had risen 0.7 per cent to $1,257.94 per ounce by 1253 GMT, having touched its highest since November 11 at $1,258.45 earlier in the session. US gold futures rose 0.6 per cent to $1,258.70.
Also supporting bullion were tempered expectations of a US rate hike in March after minutes from the Federal Reserve's latest policy meeting sounded less hawkish than expected. The minutes showed policymakers felt it was appropriate to raise interest rates again "fairly soon", but saw only a "modest risk" that inflation would increase significantly and believed the Fed would "likely have ample time" to respond.
"Even in the event of a rate increase, we doubt the precious metal will lose much ground ahead of the key presidential elections in France in April, coupled with the Washington gridlock that seems to be calcifying," INTL FCStone analyst Edward Meir said. On the political front, Trump on Thursday called China "grand champions" of currency manipulation, doing little to raise confidence on trade relations between the world's two biggest economies and spurring safe-haven flows into gold.
Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, have risen more than 5 per cent this month on geopolitical risk.
Silver rose 0.9 per cent to $18.32 per ounce, having touched its highest in three and a half months at $18.37. Silver has gained about 1.5 per cent this week in what could be its ninth straight weekly gain.