BULLION LATEST 14/12: Gold on the rise amid weaker dollar

The spot gold price was stronger during Asian morning trading on Thursday December 14, underpinned by weakness in the dollar after the US Federal Reserve delivered a much-expected interest rate rise on Wednesday, but flagged concerns about inflation in its accompanying statement.

The spot gold price was recently quoted at $1256.95-1257.30 per oz, up by $3.25 as of 11.50am Shanghai time. Trade has ranged from $1253.45-1259.45 so far today.

  • The US central bank raised interest rates by a quarter of a percentage point on Wednesday to a target range of 1.25-1.50% but the policy tightening was accompanied by concerns about low inflation, toning down expectations for policy tightening in 2018, with officials sticking to a projection of three increases next year.
  • The Fed forecast inflation to remain shy of its goal for another year, giving policymakers little reason to accelerate the expected pace of rate increases.
  • In response, the dollar index fell to a one-week low of 93.37 on Wednesday.
  • The index was down by 0.03% at 93.38 as of 10.46am Shanghai time, but earlier in the session had fallen as low as 93.33 - its lowest since December 6.
  • “While the Fed raised rates, it kept its outlook for 2018 unchanged. This gave some reprieve to investors, with gold being the beneficiary of the subsequently weaker USD. This came on the back of sluggish growth in inflation in the US,” ANZ Research said on Thursday.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.095 to $16.100-16.130 per oz. Platinum rose by $4 to $888-893 per oz, and palladium increased by $3 to $1,016-$1,021 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery increased by 1% to 274.50 yuan ($41.46 per gram, while the June silver strengthened by 2.1% to 3,802 yuan per kg.

Currency moves and data releases

  • The index was down by 0.03% at 93.38 as of 10.46am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.07% to $62.81 per barrel, while the Texas light sweet crude oil spot price decreased by 0.02% to $56.75.
  • In equities, the Shanghai Composite was down by 0.27% to 3,294.18.
  • In US data on Wednesday, the November consumer price index (CPI) was in line with expectations at 0.4% while the core reading dipped to 0.1%, against both an expected and previous reading of 0.2%. Crude oil inventories showed a larger-than-expected drawdown of 5.1 million barrels - a decline of 3.6 million barrels had been called for.
  • Today, we have a host of flash manufacturing and services purchasing managers’ index (PMI) data out across Europe and the United States, UK monthly retail sales, the Bank of England’s monetary policy summary and official bank rate as well as the European Central Bank’s (ECB) minimum bid rate. Other US data of note includes monthly retail sales, monthly import prices and unemployment claims.
  • In addition, there is an ECB press conference throughout the day.
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