Profit-taking pulls gold price from 3-month high

October 13, 2015

London (Oct 13)  Gold fell nearly 1 percent Tuesday, retreating from a three-month high on profit-taking after a two-day rally triggered by expectations the Federal Reserve will not hike US interest rates this year.

Spot gold fell 0.58 percent to $1,155.91 an ounce by 4:50 pm Beijing time,. The metal hit a three-month high of $1,169 in the previous session.

"It has been an impressive rally for the precious complex since the non-farm payrolls 10 days ago, however it looks like the momentum is now starting to wane," said James Gardiner, a trader with MKS Group.

"Overnight weakness in the oil price may also flow through the commodity complex and put additional pressure on precious metals and a bid on the dollar," he said.

A stronger dollar would make gold expensive for holders of other currencies.

Bullion has gained $50 an ounce, or nearly 5 percent, since a surprisingly weak US non-farm payrolls report on October 2. The data prompted the market to shift expectations of a Fed rate hike to 2016 and sell the dollar.

Gold, as a non-interest-paying asset, benefits from ultra-low interest rates.

However, comments from Fed officials signaling that the US central bank was in no hurry to raise rates did not offset the profit-taking Tuesday.

The Fed should hold off on any rate hike until it is clear that a global slowdown, trouble in China and other international risks will not push the US recovery off course, Fed Governor Lael Brainard said Monday.

The Fed refrained from hiking rates at its last meeting in September, citing concerns with the global economy and volatility in financial markets. It will hold two more policy meetings in 2015.

Source: GlobalTimes

Silver Phoenix Twitter                 Silver Phoenix on Facebook