TH: Gold rises to near 13-month high on equities, Fed rate views
LONDON (March 7): Gold rose on Monday, hovering just below last week's 13-month high as European shares dipped, while a fall in average US earnings lessened expectations the Federal Reserve could raise interest rates at its next policy meeting.
Although Friday's US data showed 242,000 jobs were created last month, assuaging fears the US economy could be headed into recession, a fall in average earnings could mean the Fed will be in no hurry to raise rates.
A low interest rate environment encourages investors to put money into non-interest bearing assets such as gold.
"So far the rally in gold has been based on the re-pricing of a Fed rate hike (which) the market expects to be delayed for some time, in contrast to the view at the beginning of the year that the Fed could hike again as soon as March," Danske Bank senior analyst Jens Pedersen said.
Spot gold was up 0.8% at US$1,269.03 an ounce by 1125 GMT. The metal peaked at US$1,279.60 on Friday, its strongest since Feb 3, 2015, before slipping on US data.
US gold for April delivery was unchanged at US$1,270.40.
The Fed, which is scheduled to meet on March 15–16, raised US interest rates for the first time in nearly a decade in December amid signs of strength in the world's top economy.
HSBC said in a note the rally in gold remains largely intact with the metal not falling sharply despite the strong US jobs data.
"But at these high prices restrained physical demand may begin to temper the rally and we could be in for some profit taking or liquidation," it said.
Gold shrugged off a stronger dollar, up 0.3% against a basket of leading currencies, mostly due to euro weakness ahead of a European Central Bank meeting on Thursday, widely expected to ease monetary policy further to help shore up still shaky euro zone growth.
Hedge funds and money managers reduced their bullish bets in COMEX gold in the week to March 1 for the first time since switching to a net long stance in mid-January, US Commodity Futures Trading Commission data showed on Friday.
Platinum surpassed the US$1,000 an ounce mark for the first time in more than four months, up 2.4% at US$1,003.35 an ounce.
The metal's discount to gold has dropped back to US$266, compared with Friday's record high above US$320.
Spot silver rose 1.2% to 15.66 an ounce and palladium gained 0.4% to US$557.75.
