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Gold set for biggest weekly gain in 17 months

LONDON: Gold hit a four-month high on Friday, looking set to post its biggest weekly gain in 17 months as investors sought safety from volatility in wider markets after Switzerland unexpectedly abandoned a cap on the franc. Spot gold rose 1.3 percent to its highest since Sept. 2 at $1,278.60 an ounce in earlier trade...

SAMAA | - Posted: Jan 16, 2015 | Last Updated: 6 years ago
SAMAA |
Posted: Jan 16, 2015 | Last Updated: 6 years ago
Gold set for biggest weekly gain in 17 months

LONDON: Gold hit a four-month high on Friday, looking set to post its biggest weekly gain in 17 months as investors sought safety from volatility in wider markets after Switzerland unexpectedly abandoned a cap on the franc.

Spot gold rose 1.3 percent to its highest since Sept. 2 at $1,278.60 an ounce in earlier trade and was up 1.2 percent at $1,276.41 an ounce at 1515 GMT. The metal had posted its biggest daily gain in six weeks on Thursday, up 2.6 percent, after the Swiss National Bank's move.

It was heading for its biggest weekly jump since Aug. 2013, up around 4.5 percent.

U.S. gold futures for delivery in February were up 1 percent at $1,276.90 an ounce, having gained 2.5 percent on Thursday.

Gold's move higher came despite a dollar up 0.4 percent against a basket of major currencies, which would normally hamper gains for the metal.

“The SNB announcement has added a bit of an extra juice to the gold story but from an interest rates and equity perspective it looks like there is a more solid foundation to its strength,” Deutsche Bank analyst Michael Lewis said.

Global shares steadied after Thursday's volatility, while the benchmark 10-year U.S. Treasury yield remained around its lowest level since May 2013 hit on Thursday at 1.7 percent. Low yields reduce the cost of holding non-interest bearing gold.

Dealers assumed that the SNB had moved with the knowledge that the European Central Bank would take the plunge into full scale quantitative easing at its policy meeting on Jan. 22.

Gold has benefited from years of increased central bank liquidity since the 2008 financial crisis, but more monetary stimulus in the euro zone could result in a stronger dollar.

“The drivers for gold at the moment seem to be more about the risk aversion,” Citi analyst David Wilson said.

In a reflection of improving investor confidence, holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.35 percent to 717.15 tonnes on Thursday.

Physical demand, however, suffered a setback with the higher prices putting off buyers in Asia. Premiums on the Shanghai Gold Exchange fell to $1-$2 an ounce over the global benchmark, from about $3-$4 in the previous session, indicating softer demand.

Silver rose 3.6 percent to its highest since Oct. 22 at $17.51 an ounce, platinum rose 0.3 percent to $1,255.49 and palladium slipped by 0.3 percent to $758.98 an ounce. –Reuters

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