Gold set for weekly advance as dollar drops
Singapore (Mar 19) Gold headed for a weekly gain as the dollar dropped after the US Federal Reserve dialled back forecasts for interest rate increases this year, igniting a commodities rebound. Silver touched the highest level in more than four months.
Bullion for immediate delivery climbed 0.2% to US$1,260.17 an ounce by 3:40pm in Singapore yesterday, according to Bloomberg generic pricing. The metal is 0.8% higher this week and up 19% for the year.
Traders are pricing in a slower tightening path in the US amid mounting concern over global economic growth.
Dovish Fed comments on Wednesday bolstered appetite for riskier assets, sending stocks and commodities higher while an index of the dollar had its largest two-day decline since 2009 on Thursday.
A weaker greenback boosts the appeal of precious metals as an alternative asset.
“In an environment where the dollar continues to be on the weak side, at least in the very short term, let’s talk about a week or two, there’s maybe room to touch the US$1,310 level from a technical perspective,” Dominic Schnider, the head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth-management unit in Hong Kong, said yesterday in a Bloomberg Television interview.
Holdings in exchange-traded funds backed by gold rose 3.3 tonnes to 1,741.6 tonnes on Thursday, the highest level since April 2014, according to data compiled by Bloomberg.
Spot silver rose as much as 1.5% to US$16.1432 an ounce, the highest level since Oct 28.
Palladium was little changed at US$592.55 an ounce after touching US$598.15 on Thursday, the highest since Nov 11. Platinum lost 0.2%.