daniel chigunwe
Gold purchases from central banks led to last year’s surge, with purchases exceeding 1 000 tonnes for two consecutive years
Gold prices held above the US$2 100 level yesterday, near a record peak hit in the previous session as hopes for US rates easing by mid-year mount, while traders awaited remarks on the economy’s health from Federal Reserve Chair Jerome Powell.
Spot gold edged down 0,1 percent at US$2 126.13 per ounce, as of 0458 GMT. US gold futures GCcv1 fell 0,4 percent to US$2 134.30.
Spot prices hit a record peak of US$2 141.59 per ounce overnight on Tuesday, rallying for a fifth straight session.
Gold’s rally is sentiment driven, which was triggered by last week’s poor US economic data that gave little more clarity for a June rate cut, said Ajay Kedia, director at Kedia Commodities, Mumbai, adding, without other factors at play, such as dollar’s movement, or any surge in geopolitical tensions, gold could see profit taking.
Traders are weighing risks to the US economic health in a high-interest rate environment and would be tuning into Powell’s first day of semi-annual congressional testimony for more clarity on the same.
US services industry growth slowed a bit in February amid a decline in employment and new orders for US manufactured goods dropped more than expected in January.
Data on the US labour market due this week will also be closely watched for. Any downside surprise could help support gold.
Traders see a 71 percent chance for a June Fed rate cut. Lower rates boost the appeal of non-yielding bullion.
“The central banks are buying more than 1 000t of gold consecutively from the last two years, versus the historic average of 300t.
This has made-up for all the loss in the retail and ETF demand,” said Kunal Shah, head of research, Nirmal Bang Commodities, Mumbai.
Spot platinum rose 0,4 percent to US$884.16 per ounce, and palladium rose over 1 percent to US$958,20, while silver dropped 0,3 percent to US$23,63. – CNBC Africa
Online Reporter