January 26, 2016
Gold hits two-week high as equities retreat again
(Reuters)- Gold climbed to a two-week high on Tuesday as falling equities burnished bullion's safe-haven draw, and the dollar also came under pressure as the Federal Reserve meets against a backdrop of a slowing global economy.
Risk appetite soured again as equities and crude oil resumed their decline, boosting gold demand.
Spot gold touched a session peak of $1,111.26 an ounce, its loftiest since Jan. 8, and was up 0.3 percent at $1,110.86 by 0313 GMT.
"Gold might go for a run," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore, adding the metal can test $1,138, a level last reached in November. "If that is breached, it could go to $1,160."
U.S. gold for February delivery rose 0.6 percent to $1,111.50 an ounce.
Indications that a wobbly global economy may limit the opportunity for the U.S. Federal Reserve to raise interest rates this year also supported gold.
The Federal Open Market Committee starts a two-day policy meeting later on Tuesday, and is widely expected to leave its federal funds rate unchanged at 0.25-0.50 percent.
The probability of another rate increase at the next Fed meeting in March has eased, with some analysts seeing it postponed to later in the year.
That puts downward pressure on the dollar and benefits gold, which has gained nearly 5 percent so far this year after declining in 2015 for a third year in a row.
At this week's meeting, it is likely that "the Fed will reiterate its dovish stance and this should push gold prices up", INTL FCStone analyst Edward Meir wrote to clients.
Meir said the poor shape of the U.S. equity market shows "a major capitulation will be needed in order to clear out much of the selling", suggesting investors should keep a bullish gold bias in the near term.
Spot platinum was down 0.3 percent at $855.74 an ounce, but well off last week's seven-year trough of $806.31.
Platinum is forecast to average less than $1,000 an ounce in 2016 for the first time in more than a decade as global growth concerns and demand fallout from the Volkswagen scandal grip the market, a Reuters poll showed.
Spot palladium slipped 0.3 percent to $488.50 an ounce and silver gained 0.2 percent to $14.27.