Home » Industry News » PRECIOUS-Gold extends gains to 3-week high in longest rally since 2012

PRECIOUS-Gold extends gains to 3-week high in longest rally since 2012

Gold extended gains to a seventh session on Thursday in its longest winning streak since 2012 as soft U.S. data boosted expectations the Federal Reserve would keep interest rates low for the time being.

Spot gold rose 0.8 percent to $1,204.20 an ounce by 0739 GMT, after earlier hitting $1,204.60, its highest since March 5. The seventh day of gains matches a similar stretch in August 2012.

“It took quite a bit of work to chew through offers lined up sub-$1,200 and with moderate follow-through buying it looks as though getting through $1,205-$1,210 will be important for further upside,” said MKS Group trader Sam Laughlin.

Another trader said more weakness in the U.S. dollar and soft data could further boost the rally.

The dollar eased against a basket of major currencies as disappointing U.S. economic data added to Fed’s dovish stance last week. After its policy meet last week, the U.S. central bank sounded caution over economic growth and the pace of any rate hikes.

Data on Wednesday showed U.S. business investment spending plans fell for a sixth straight month in February, leading economists to further lower their first-quarter growth estimates.

Softer economic growth could prompt the Fed to delay raising interest rates, a move likely to hurt the dollar.

Markets expected U.S. rates, currently near zero, to be increased from June, but last week’s comments have led to many thinking that a rate increase would not come until September.

Higher rates would boost the dollar, but hurt gold, a non-interest paying asset.

Safe-haven gold also drew support from geopolitical tensions. Saudi Arabia launched air strikes in Yemen on Thursday in coalition with Gulf region allies to counter Iran-backed forces besieging the southern city of Aden, where the U.S.-supported Yemeni president had taken refuge.

U.S.-led coalition warplanes launched their first airstrikes against Islamic State targets in Tikrit on Wednesday.

Meanwhile, investors remained cautious over gold’s outlook with SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, continuing to see outflows. The fund’s holdings fell 0.2 percent to 743.21 tonnes on Wednesday. Physical demand was also slowing due to the rally in prices.

In China, the second biggest gold consumer, premiums – an indication of demand – eased to about $2-$3 an ounce, compared with $6-$7 last week.

This article comes from eBullion, Inc. US Stock Symbol(EBML) shares of listed companies to reprint, please indicate the source