Gold slips as upbeat US data boosts dollar, dims rate-cut bets

A firmer US dollar makes greenback-priced metals more expensive for overseas buyers

Prices of gold and silver extended their losses on Friday (Jan 16) after a stronger-than-expected US economic data pushed the US dollar higher and fuelled expectations that the US Federal Reserve will not cut interest rates for a while.

Spot gold eased 0.3 per cent to US$4,601.53 per ounce by 10.17 am. Prices are still poised for about a 2 per cent weekly gain after scaling a record peak of US$4,642.72 on Wednesday.

US gold futures for February delivery fell 0.4 per cent to US$4,605.20.

The US dollar was poised for a third weekly gain on Friday after data from the US Labor Department showed weekly initial jobless claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 198,000, below expectations of economists polled by Reuters calling for 215,000 claims.

A firmer US dollar makes greenback-priced metals more expensive for overseas buyers. Gold, a non-yielding asset, also benefits from low rates because they reduce the opportunity cost of holding it.

Gold’s safe-haven appeal weakened further as geopolitical tensions eased. US President Donald Trump said that he was informed that fatalities in Iran’s protest crackdown were declining and that he did not believe authorities were planning mass executions.

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China’s central bank announced cuts on Thursday to sector-specific interest rates to provide an early boost to the economy.

Poland’s central bank wants to hike its gold reserves to 700 tonnes, its governor said on Thursday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings nudged 0.05 per cent higher to 1,074.80 tonnes on Thursday.

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Individual investors have been snapping up silver at such a pace it has turned into the most crowded commodity trade in the market, according to a report published on Thursday by Vanda Research.

TD Securities said on Wednesday in a model portfolio update publication that it closed a short silver position after prices hit its exit level at US$93.15 an ounce, resulting in a theoretical loss of about US$606,000.

Spot silver shed 1.6 per cent to US$90.80 per ounce. It was headed for a weekly gain of about 13 per cent after hitting an all-time high of US$93.57 in the previous session.

Spot platinum dropped nearly 2 per cent to US$2,363.11 per ounce, while palladium fell 0.8 per cent to US$1,786.13 per ounce. REUTERS

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