Gold Climbs to Four-Week High on Dollar’s Drop and Haven Demand

2017-01-05 09:39:14

Gold Climbs to Four-Week High on Dollar’s Drop and Haven Demand

By Eddie van der Walt and Ranjeetha Pakiam, Bloomberg News

Gold climbed to a four-week high as a weaker dollar and uncertainty over the impact of Donald Trump’s policies bolstered demand for a haven. Palladium fell, ending the biggest four-day surge since March.

Gold has risen every day this year, and gained as much as 1.4 percent to $1,179.43 an ounce on Thursday. The advance has coincided with the Bloomberg Dollar Spot Index’s retreat from the highest in more than a decade.

Gold is recovering from the biggest quarterly slump since 2013 as minutes from the Federal Reserve’s December meeting showed uncertainty over how President-elect Trump’s policies would impact the pace of interest-rate increases. Policy makers reiterated that a “gradual” pace of rate hikes over the coming years would likely remain appropriate, damping speculation officials will step in to counter inflation with higher borrowing costs.

“Last night’s Fed minutes highlighted the uncertainty that still prevails,” said Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London. “Expectations of aggressive rate hikes in 2017 may be overdone, leaving the yield environment favorable to gold.”

Bullion for immediate delivery was up 0.8 percent at $1,172.39 by 11:30 a.m. in London, according to Bloomberg generic pricing. The Bloomberg dollar gauge dropped as much as 0.8 percent.

Palladium declined 0.6 percent to $733.83 an ounce in London. It jumped 11 percent in the previous four days on an improving outlook for demand from carmakers, which use the metal to curb harmful emissions. Prices rose 4.2 percent on Wednesday as General Motors Co.’s December deliveries beat forecasts while Ford Motor Co. and Nissan Motor Co. posted surprise gains.

Read more: Automakers’ December deals push 2016 to a record seventh gain.

In other precious metals news:

Holdings in gold-backed exchange-traded funds fell 1.1 metric tons to 1,771.4 tons as of Wednesday, the lowest since May, data compiled by Bloomberg show. Silver prices gained 0.7 percent to $16.546 an ounce. Platinum rose 1.3 percent to $955.55 an ounce, touching the highest since November.

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