In Commodity News 24/09/2016
Gold’s on a roll, courtesy of the Federal Reserve.
The precious metal is heading for the biggest weekly advance since July after U.S. central bankers opted to leave interest rates unchanged while reining in their outlook for future increases. Investors added 6.3 metric tons to exchanged-traded funds backed by gold this week through Thursday, data compiled by Bloomberg show.
Bullion has awakened from a slumber after Fed rate concerns had helped wipe out gains for the quarter. Money is pouring back in as low borrowing costs in the U.S. and economic stimulus by central banks from Japan to Europe drive demand for the precious metal as a store of value.
“The fact that they didn’t raise rates breathes some life back into the gold market,” Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Traders are in a buy and hold mode right now. They’re looking at adding to positions.”
Gold for immediate delivery slipped less than 0.1 percent to $1,336.48 an ounce at 1:55 p.m. in New York, after four straight gains. Prices climbed 2 percent this week, the most since July 29, according to Bloomberg generic pricing. Gold futures for December delivery had a 2.4 percent advance this week, the biggest rally since June 10.
On Friday, a Markit Economics’ purchasing-managers index expanded at a slower pace than economists forecast. Signs of weakness in manufacturing bolster the case for keeping borrowing costs low, Haberkorn said.
“The inaction by the Fed revived investor appetite for gold,” Australia & New Zealand Banking Group Ltd. said in a note. “While a cut in the Fed’s outlook for rates and the weaker U.S. dollar no doubt played a part, the continued efforts by Bank of Japan to bolster economic stimulus also helped.”
Source: Bloomberg
