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Singapore - Gold held near the lowest level in more than two weeks as risk appetite returns to financial markets, pushing US stocks to a record on optimism about the economy’s strength and damping demand for haven assets.
Bullion for immediate delivery traded at $1 328.90 an ounce at 08:18 from $1 328.85 on Monday, the lowest close since June 30, Bloomberg generic pricing shows. Shanghai silver futures held a decline.
Gold’s rally this year has been trimmed as investors’ confidence returns following US reports on Friday showing improving retail sales to higher consumer prices, adding to speculation that the Federal Reserve could increase interest rates this year.
The S&P 500 Index notched its fifth record in six sessions and a gauge of the dollar was steady. Higher rates would cut the appeal of non-interest bearing assets such as bullion.
“Market risk-on sentiment seems to have gone back” on the table, Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking, said by email. “Our bearish call for gold has long been anchored on the rate hikes by the Fed. Though at least one rate hike may still be possible, the drivers for gold are now twofold: global risk appetite and dollar strength.”
Holdings in gold-backed exchange-traded funds rose 2.5 metric tons to 2 004.9 tons on Monday, data compiled by Bloomberg show.
In China, bullion of 99.99% purity added 0.1% to $1 331.61 an ounce on the Shanghai Gold Exchange. Silver for December delivery fell 0.1% to 4 389 yuan a kilogram on the Shanghai Futures Exchange, after a 1.6% decline on Monday. Spot silver declined 0.8%, platinum dropped 0.6% and palladium retreated 0.5%.
