Gold hits five week high as soft U.S. data eased rate rise fears
Spot gold rose to the highest since April 6 at $1,219.60 an ounce and was trading up 0.3 per cent at $1,219.70 an ounce.
The metal was also heading for its biggest weekly gain in five months, mostly aided by an almost 2 per cent increase on Wednesday after the dollar tumbled to three-month lows.
Data showed US retail sales were flat in April as consumers cut back on purchases of automobiles and other big-ticket items, the latest sign the economy is struggling to rebound.
Citigroup strategist David Wilson said: “I’m forecasting gold to average $1,200 this quarter, as a slightly weaker dollar will continue to be supportive until we see some stronger data points.”
“Only a rebound in employment data will start triggering talks about an imminent interest rate hike again because now expectations have been dampened.”
The greenback was down 0.4 per cent against a basket of leading currencies, while European equities suffered from bond market jitters and a rebound in the euro.
A weaker dollar makes gold cheaper for holders of other currencies, while dipping shares lift the metal’s appeal as a hedge against risk.
An analyst at Phillip Futures, Howie Lee said: “This broad-based weakness in the US retail space confirms our belief that the Fed’s hands are tied at the moment,”
Gold had dropped when strong data last year heightened views that the Federal Reserve would raise interest rates from record lows, starting in June.
No Comments yet