March 24, 2016
Spot Gold Targets Biggest Weekly Loss in Four Months
(Reuters) - Spot gold steadied on Thursday, but was still facing its biggest weekly loss since early November after slipping around 2 percent in the previous session as hawkish comments by Federal Reserve officials stoked a recovery in the dollar.
The comments put investors on guard for the possibility of more U.S. interest rate hikes this year than currently anticipated, triggering a widespread correction across commodities. Oil plunged 4 percent, while copper cracked below $5,000 a tonne.
Philadelphia Fed President Patrick Harker said the central bank should consider another hike as early as next month if the U.S. economy continues to improve, while Chicago Fed President Charles Evans also said he expects two more rate increases this year.
The move pushed investors to cut long positions, said Triland in a note, with further consolidation looking likely.
"Sentiment may have gained traction fairly sharply over previous months however the fundamentals are yet to turn a corner ... It's a tough call to the upside until we break $1,286 and $1,308."
Spot gold was little changed at $1,218.30, down 0.1 percent by 0103 GMT. Gold on Wednesday fell as low as $1,215 an ounce, its weakest since Feb. 26 and was on track for a 2.9-percent weekly loss ahead of the Easter holiday break which starts on Friday.
U.S. gold slipped 0.4 percent to $1,218.80.
New U.S. single-family home sales rebounded modestly in February as a surge in the West offset sharp declines in other regions, pointing to a gradually improving housing sector amid a dearth of properties available on the market.
"Gold is starting to benefit from a revival of demand for inflation hedges, offsetting at least some of the downside risks from renewed strength in the U.S. dollar," said Capital Economics in a note.
"What's more, silver is now exceptionally cheap relative to gold, particularly if the prices of industrial metals recover further."
Silver traded up 0.2 percent at $15.25. Platinum was little changed at $956 an ounce, while palladium slid half a percent to $576.60.
Oil prices tumbled 4 percent on Wednesday, with U.S crude settling below the key $40 per barrel mark after a sixth straight week of record highs in stockpiles that traders warned could cut short the market's two-month long rally.
Meanwhile, Newcrest Mining said it has partially hedged future gold production at its Telfer gold mine in Western Australia and that it may hedge more in the future.