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Gold hits two-week high ahead of Diwali

Reuters
Filed on October 25, 2019
Diwali, Dubai

The precious metal has gained 0.8 per cent this week.

Gold rose to a two-week high on Friday, holding above the $1,500 ounce psychological level, as weak US economic data spurred expectations for another interest rate cut by the Federal Reserve later this month, while palladium scaled a fresh peak.

Spot gold hit its highest since October 10 at $1,504.35, but was down slightly by 0312 GMT, at $1,501.70 per ounce.

The precious metal is priced at Dh182 for 24K, Dh171 for 22K and Dh140 for 18K, per gram in Dubai.

The metal has gained 0.8 per cent this week, heading for its biggest weekly gain since the week ended August 20. US gold futures were flat at $1,505 per ounce.

This is the second time in past two weeks that spot gold has crossed the $1,500 level. The metal breached the ceiling for the first time in more than six years on Aug. 7 and hit a record high of $1,557 on Sept.4.

New orders for key US-made capital goods fell more than expected in September and shipments also declined, a sign that business investment remains soft amid the fallout from the U.S.-China trade war, data showed on Thursday.

The U.S. Federal Reserve has cut interest rates twice this year and investors see another cut on the cards as the economy struggles with the headwinds from the long-drawn trade war and slowing global growth.

"Gold still has a number of geopolitical uncertainties and a high chance of a Fed rate cut at the end of this month to get support from, but considering the Sino-U.S. trade tensions are easing, any fresh positive development will weigh on prices," said Argonaut Securities analyst Helen Lau.

"Today, we see some traders booking profit after prices broke the rangebound upper level of $1,500 as data showed a further slowdown in the U.S. economy."

Gold is often seen as a safer investment during times of political and financial uncertainty.

In Europe, Prime Minister Boris Johnson called for a general election on Dec. 12 to break Britain's Brexit impasse, conceding he will not meet his "do or die" deadline to leave the European Union next week.

Asian shares inched higher on Friday, tracking small gains in global markets, as positive earnings helped to offset economic growth concerns, while sterling weakened as the prospect of a British election added fresh uncertainty to the Brexit drama.

China's net gold imports via Hong Kong fell 9 per cent in September from the previous month, mainly due to softer demand and expectations of possible measures by Beijing to prop up its yuan currency.

Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, fell 0.13 per cent on Wednesday from Tuesday.

Elsewhere, palladium hit an all-time high of $1,785.50 on supply concerns and was last up 0.2 per cent at $1,780.55 an ounce.

Palladium is crucial in the making of catalytic converters used in exhaust systems of vehicles, and concerns over its supply running out have helped lift prices by more than 41 per cent this year alone, despite a weakening auto sector.

Silver rose 0.1 per cent to $17.80 per ounce. Platinum was up about 0.1 per cent at $924.40, after scaling a more than three-week high in the previous session.



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