1. Gold prices hold gains as US Fed rate hike prospects wane

Gold prices hold gains as US Fed rate hike prospects wane

Gold edged higher in early Asia trade on Wednesday, holding on to moderate gains from the previous session after equities fell and weak economic data from the U.S. undermined expectations of a near-term U.S. interest rate hike.

By: | Published: August 3, 2016 8:18 AM
U.S. consumer spending rose more than expected in June, but the Commerce Department report showed inflation still muted. (Reuters) U.S. consumer spending rose more than expected in June, but the Commerce Department report showed inflation still muted. (Reuters)

Gold edged higher in early Asia trade on Wednesday, holding on to moderate gains from the previous session after equities fell and weak economic data from the U.S. undermined expectations of a near-term U.S. interest rate hike. Spot gold nudged up 0.2 percent to $1,365.50 an ounce by 0108 GMT.  Bullion hit a high of $1,367.33 on Tuesday, its highest since July 11.

U.S. gold was flat at $1,372.6 an ounce. Asian shares bowed lower on Wednesday while the yen lorded over a weakened U.S dollar as talk the Bank of Japan may retreat from its massive bond-buying campaign twigged a shakeout in debt markets globally. U.S. consumer spending rose more than expected in June, but the Commerce Department report showed inflation still muted. This, together with weak business investment and the second quarter’s anemic economic growth pace, could encourage a cautious Federal Reserve to keep interest rates at current low levels for a while.

A raft of global risks that could adversely affect the United States remains on the horizon and requires close monitoring, Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday.

Atlanta Federal Reserve Bank President Dennis Lockhart said on Tuesday it was too soon to rule out an interest rate increase at the U.S. central bank’s next meeting in September, with a lot of data set to come in on the health of the economy.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.62 percent to 969.97 tonnes on Tuesday. Inflows of the six major silver exchange-traded funds (ETF) followed by Reuters rose to a record high at 557.6 million ounces on Aug. 1.

There is little doubt that gold has had a stellar year so far, but there may be some areas of concern emerging that could act as a brake on further gains. Fresnillo Plc’s chief executive said the price of silver had bottomed, and added the miner would report a stronger core profit in the second half.

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