Gold falls as dollar and stock markets rise
Trucks ferry excavated gold, copper and zinc ore from the main mining pit at the Bisha Mining Share Company, northwest of Eritrea's capital Asmara, on February 17, 2016. Spot gold was down 0.5 percent at $1,227.06 an ounce on Friday. (REUTERS/Thomas Mukoya)
Reuters
LONDON: Gold fell on Friday, as the dollar and shares rose, but fund
buying persisted as investors expected a G-20 summit would produce
little in the way of a coordinated stimulus program.
Spot gold was down 0.5 percent at $1,227.06 an ounce by 1456 GMT.
“The increase in price this year has been supported by physical purchases, very strong in the funds and concerns are more global in nature, with increasing probability that there will be a recession in the US,” Julius Baer analyst Warren Kreyzig said.
Concerns that a slowing global economy could eventually push the US into recession eased on Friday as data showed US economic growth slowed less than expected in the fourth quarter.
The dollar rose 0.6 percent against a basket of main currencies, extending earlier gains after the GDP data.
Despite Friday’s losses, gold seems to have rediscovered its role as a shelter for risk-averse investors. It has risen around 16 percent this year as share prices have tumbled and fears of a global economic slowdown increased.
It hit a one-year high of $1,260.60 this month, further supported by the repricing of expectations for US interest rate rises.
Gold funds accumulated their largest inflows since 2009 in the last week as financial market turmoil continued to unnerve investors, Bank of America Merrill Lynch said on Friday.
Assets of SPDR Gold Trust, the top bullion exchange-traded fund, rose to their highest since March 2015 on Wednesday.
The increase in ETFs this year is the highest since 2010.
Bullion is also supported by strong technicals.
Gold prices have developed a bullish technical formation called the ‘golden cross,’ where the 50-day moving average goes above the 200-day moving average.
The shorter-term price average is now about $3 above the longer-term average.
Among other precious metals, platinum dropped to a three-week low of $912.84 an ounce, while silver fell 1.7 percent to $14.92 an ounce.
Palladium rose 1.1 percent to $485.90 an ounce, but remained near a six-week low reached in the previous session.
Spot gold was down 0.5 percent at $1,227.06 an ounce by 1456 GMT.
“The increase in price this year has been supported by physical purchases, very strong in the funds and concerns are more global in nature, with increasing probability that there will be a recession in the US,” Julius Baer analyst Warren Kreyzig said.
Concerns that a slowing global economy could eventually push the US into recession eased on Friday as data showed US economic growth slowed less than expected in the fourth quarter.
The dollar rose 0.6 percent against a basket of main currencies, extending earlier gains after the GDP data.
Despite Friday’s losses, gold seems to have rediscovered its role as a shelter for risk-averse investors. It has risen around 16 percent this year as share prices have tumbled and fears of a global economic slowdown increased.
It hit a one-year high of $1,260.60 this month, further supported by the repricing of expectations for US interest rate rises.
Gold funds accumulated their largest inflows since 2009 in the last week as financial market turmoil continued to unnerve investors, Bank of America Merrill Lynch said on Friday.
Assets of SPDR Gold Trust, the top bullion exchange-traded fund, rose to their highest since March 2015 on Wednesday.
The increase in ETFs this year is the highest since 2010.
Bullion is also supported by strong technicals.
Gold prices have developed a bullish technical formation called the ‘golden cross,’ where the 50-day moving average goes above the 200-day moving average.
The shorter-term price average is now about $3 above the longer-term average.
Among other precious metals, platinum dropped to a three-week low of $912.84 an ounce, while silver fell 1.7 percent to $14.92 an ounce.
Palladium rose 1.1 percent to $485.90 an ounce, but remained near a six-week low reached in the previous session.
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