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Singapore - Gold snapped six days of losses to rebound from the lowest level in seven weeks as a rally in the dollar paused.
Bullion for immediate delivery rose as much as 0.8% to $1 234.36 an ounce and traded at $1 228.61 at 08:33, according to Bloomberg generic pricing. The metal retreated on Wednesday to $1 217.93, the lowest intraday level since April 6, completing a six-day losing streak that’s the longest since November.
Gold remains headed for the biggest monthly drop since November on speculation that the Federal Reserve may increase US borrowing costs as early as next month, denting demand for bullion which doesn’t pay interest.
The Bloomberg Dollar Spot Index, which is set for its best monthly performance since January 2015, fell for a second day on Thursday as a momentum indicator approached a level that signals the currency may have moved too far, too fast.
“It’s because of the weakening of the dollar that we see precious metals have come up a little,” Brian Lan, managing director of Singapore-based GoldSilver Central Pte, said by phone. “Previously we’ve seen gold come down sharply, so this is a slight correction.”
The odds of a US hike next month are at 34%, up from 12% at the end of April, and for July the odds are better than even, Fed Funds futures show. That means the dollar’s rally isn’t over yet, according to Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth management unit in Hong Kong.
Second half
“Definitely second half of the year, we’re going to get two hikes - that’s not fully priced in, and that’s why most dollar strength’s to come, particularly versus Asian currencies,” Schnider said in a Bloomberg TV interview on Thursday. “Some people are going to get caught on the wrong side. Gold is going to roll over, we’re going to fall back to $1 150 and so be ready for more weakness in the short term.”
Holdings in gold-backed exchange-traded funds fell for a second ay to 1 843.4 metric tons as of Wednesday, data compiled by Bloomberg show. In China, bullion of 99.99% purity rose 0.4% to $1 231.19 an ounce on the Shanghai Gold Exchange. Silver climbed 0.8%, platinum surged 1.8% and palladium jumped 2%.
