Mining
Monday, September 12th, 2022 9:57 am EDT
[Click here for an interactive chart of gold prices]
The metal rose as much as 1% earlier in the session with the greenback down for a second day, providing relief to commodities priced in the currency. Bullion has found a floor near $1,700 an ounce this month after slumping in August on the dollar’s rally.
The swift reversal comes just after speculators turned against the metal, which can accelerate price gains if they buy the futures back to limit losses. Hedge funds trading on the Comex substantially boosted their bearish bets to the highest in a month last week, according to data from the Commodity Futures Trading Commission.
“A bit of dollar weakness on top of recent short selling by funds was all it took to get the ball rolling,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, told Bloomberg.
Economists forecast the August US inflation would slow for the second month in a row to 8.1%, potentially easing pressure on the central bank to keep aggressively hiking rates. Still, Fed officials last week seemed to point to another super-sized increase of 75 basis points in September.
The European Central Bank recently lifted rates by 75 basis points and is prepared to do the same when the committee meets in October, according to Bloomberg sources. The move is supporting the euro against the dollar, while providing relief for gold.
“Against recent sharp moves in USD and rates, gold has been relatively resilient,” Bank of America analysts including Michael Widmer wrote in a Bloomberg note.
“Meanwhile the Fed signaling a slowdown in the hiking cycle may ultimately bring new buyers into the market, so we continue to expect upside to gold as we move into 2023.”
(With files from Bloomberg)
This post has been syndicated from a third-party source. View the original article here.
