June 16, 2015
Gold Holds Gain as U.S. Interest Rates Assessed Before Fed Meets
(Bloomberg)- Gold held an advance and platinum traded near the lowest level in six years before a policy update from the Federal Reserve and a meeting of European finance ministers this week that will discuss the debt crisis in Greece.
Bullion for immediate delivery traded at $1,187.25 an ounce by 12:02 p.m. in Singapore from $1,186.43 on Monday, when prices rose 0.4 percent, according to Bloomberg generic pricing. The metal added as much as 0.8 percent on Monday after data showed U.S. factory output unexpectedly declined in May, tempering expectations that the U.S. will boost interest rates.
Gold sank about 9 percent from this year’s peak in January as improving economic data in the U.S. bolstered speculation the Fed will boost borrowing costs. While the central bank probably won’t raise rates at its two-day meeting starting June 16, it may signal higher chances of an increase in September, according to Barclays Plc. Higher rates curb bullion’s allure because it usually gives returns only through price gains.
“There’s more of a chance that the market gets a dovish surprise, especially with Greece still in play,” Jordan Eliseo, chief economist at Australian Bullion Co. in Sydney, said by e-mail. “That could end up supporting bullion, though we don’t see any major upside imminent.”
Factory output in the U.S. fell 0.2 percent last month, according to data by the Fed on Monday. An appreciation in the dollar that began last year hurts exports, while the plunge in oil prices curbs investment in drilling equipment. The Bloomberg Dollar Spot Index has risen 16 percent over the past year and was 0.1 percent higher at 1,175.34 on Tuesday.
Gold may drop to $1,100 an ounce in the short term if the dollar sustains the increase, Australia & New Zealand Banking Group Ltd. said Monday. The metal will probably remain under pressure over the rest of 2015 as prospects for higher U.S. interest rates boost the dollar, according to Morgan Stanley.
European policy makers urged Greece to make concessions needed to unlock bailout aid, with a June 18 meeting of finance ministers the next opportunity for a showdown between the nation and its creditors.
Bullion for August delivery was unchanged $1,185.80 an ounce on the Comex in New York. Assets in gold-backed exchange-traded products slumped to the lowest level since 2009. Metal of 99.99 percent purity added 0.2 percent to 237.10 yuan a gram ($1,187.96 an ounce) on the Shanghai Gold Exchange.
Platinum traded at $1,090.07 an ounce after falling as much as 1.6 percent a day earlier to $1,077.61, the lowest level since May 2009. Silver was at $16.0735 an ounce from $16.083 on Monday, when it climbed 0.7 percent. Palladium increased 0.3 percent to $736.96 an ounce.