daniel chigunweGold dipped after rallying in the wake of a searing inflation report from the US, as investors again turned to the greenback as a haven asset.
Bullion on Wednesday bucked a downward trend that’s seen it slide for four consecutive weeks after data showed US inflation roared last month to a fresh four-decade high, up 9,1 percent from a year earlier.
The precious metal finished up 0,6 percent in the previous session as investors bet that the Fed is more likely than not to raise interest rates by 100 basis points when it meets July 26-27, a move that would boost the chances of the world’s largest economy entering a recession.
By yesterday, investors had digested the inflation news and again turned away from gold to the greenback as a hedge, according to David Lennox, a resources analyst at Fat Prophets.
“We’d really need to see a much lower US dollar for gold to get a sustained positive kick going forward,” said Lennox. “Investors are turning more to the greenback than bullion as a haven asset.”
This year, gold prices have been volatile as Russia’s invasion of Ukraine spurred a rally in the haven to well above US$2 000 an ounce in March, only for the momentum to fade as the growth and inflation outlook shifted.
In recent weeks, investors have cut holdings in bullion-backed exchange-traded funds.
Spot gold was down 0,4 percent to US$1 728.09 at 9:10am in Singapore. The Bloomberg Dollar Spot Index gained 0,3 percent, reversing Thursday’s decline. Silver, platinum and palladium all fell. – Bloomberg
Peter Tanyanyiwa
Online Reporter