Gold Hits Over Two-Week High As US Data Trims Rate Hike Hopes
The dollar took a tumble and Asian stocks rose to one-year highs on Wednesday after surprisingly weak US services sector activity
Photo Credit :
Gold rose to a fresh two-and-a-half-week high on Wednesday after gaining nearly 2 percent in the previous session, as disappointing U.S. economic data reinforced expectations the U.S. Federal Reserve will keep rates on hold in September.
U.S. services sector activity slowed to a 6-1/2-year low in August amid sharp drops in production and orders, pointing to slowing economic growth that further diminished prospects for a near-term interest rate hike.
The U.S. non-manufacturing new orders index for August fell to its lowest since December 2013.
Spot gold was up 0.1 percent at $1,351.10 per ounce by 0643 GMT. The metal touched a high of $1,352.65, its best since Aug. 19.
U.S. gold futures rose 0.2 percent to $1,356.
The market sentiment has certainly changed since Tuesday's poor economic data, MKS PAMP Group trader Alex Thorndike said. The U.S. dollar remains on the backfoot as the chances of a Fed rate hike in September have diminished even further, he added.
Spot gold may extend its gains to $1,358 per ounce, as it has cleared a resistance at $1,347, according to Reuters technical analyst Wang Tao.
"Markets are expected to be quiet till European Central Bank's interest rate decision on Thursday," said Kent Li, deputy in-charge for bullion desk, Wing Fung Precious Metals.
"We could see gold move in the $1,350-$1,360 range with a support at $1,345 and resistance at $1,365."
The dollar took a tumble and Asian stocks rose to one-year highs on Wednesday after surprisingly weak U.S. services sector activity.
"The recent rally is impressive. But absence of a rate hike in September may largely be priced into gold. Also there has been some tightening of real yields," HSBC analyst James Steel said in a note.
"This may limit gains just as ongoing geopolitical tensions, public discontent, and threats to free trade and globalization will likely support the bullion markets. This leaves us price positive but likely with limited upside."
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.52 percent, its best one-day gain since July 5, to 952.14 tonnes on Tuesday from 937.89 tonnes on Friday.
The Perth Mint's sales of gold and silver products fell in August, in line with a trend reported by precious metal businesses worldwide, the mint said in a blog post on its website on Wednesday.
Spot silver was down 0.6 percent after touching an over three-week high of $20.13.
Platinum rose 0.2 percent to $1,097.80. It hit a 2-week high of $1,105.80. Palladium was up 0.8 percent and touched an over two-week high of $708.40.