3.42 AM Sunday, 1 October 2023
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:54 06:07 12:11 15:33 18:09 19:23
01 October 2023

Fears over currency markets push gold above $1,100

Spot gold was bid at $1,100.15 an ounce in New York. (AFP)

By Reuters

Gold prices rose above $1,100 an ounce yesterday, with buying prompted by concern over the outlook for the currency markets ahead of a meeting of Eurogroup ministers in Brussels.

Spot gold was bid at $1,100.15 an ounce at 1016 GMT, against $1,092.40 late in New York on Friday. US gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose $10.50 to $1,100.00 an ounce.

"Investors seem to be partly offloading euro-zone risk equally in gold and the dollar," said Pradeep Unni, senior analyst at Richcomm Global Services. "This is specifically the reason why gold is firm despite the greeback also being strong.

"Past data suggest that this decoupling phenemenon is more of a temporaray development and (gold and the dollar) will switch to their inverse correlations in a short time frame," he added.

Euro zone finance ministers are expected to pile pressure on Greece to fully implement planned budget deficit cuts so the euro area will never have to deliver on its last week's pledge of support for Athens.

The euro retreated to near nine-month lows against the dollar yesterday as doubts intensified about whether policymakers in the euro zone will help debt-laden Greece.

Strength in the dollar usually weighs on gold, but when fears over financial market stability are rising, both sometimes benefit from risk aversion.

On the wider markets, European shares rose yesterday as investors awaited the euro zone finance ministers meeting. Concern of the fiscal health of Portugal, Ireland, Italy, Greece and Spain are lingering, analysts said.

"Traders and investors will be looking for further expansion on the EU's 'support' for Greece's debt problems, with the generally negative outlook for the Piigs likely to further question the cohesion and direction of the euro," said James Moore, TheBullionDesk.com analyst, yesterday.

Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.

On the physical markets, India's wholesale gold demand cooled off yesterday as prices edged towards the most-watched $1,100 an ounce-mark, after offtake picked up for the most part of last week, dealers said.

Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, were unchanged at 1,106.378 tonnes on Friday.

Among other precious metals, silver was bid at $15.58 an ounce against $15.48.

The world's largest silver ETF, the iShares Silver Trust, said its holdings rose 48.84 tonnes or 0.5 per cent from the previous business day to 9,446.40 tonnes as of February 12.

Platinum was at $1,518 an ounce against $1,512.50, while palladium was at $412 against $414.50.


Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.