Gold firm near $1,200 on dovish Fed; eyes second weekly jump

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Gold clung to its biggest gain in a month on Friday and looked set to post a second straight weekly jump, bolstered by the Federal Reserve’s caution over U.S. interest rate hikes and a softer dollar.Gold firm near $1,200 on dovish Fed

FUNDAMENTALS

  • Spot gold was little changed at $1,200.54 an ounce by 0039 GMT. The metal jumped 1.3 percent on Thursday, its biggest daily rise since mid-May. It has gained 1.7 percent for the week.
  • Bullion got a boost after Fed policymakers said on Wednesday a hike would be appropriate only after further improvement in the labour market and greater confidence that inflation would rise.
  • In their projections, Fed officials saw slightly lower rates at the end of 2016 and 2017 than forecast in March and more policymakers were now in favour of hiking rates only once or not at all this year.
  • The Fed’s caution this week comforted investors as bullion has come under pressure this year from expectations that rates will soon rise for the first time in nearly a decade. Higher rates could dent demand for the non-interest-paying asset.
  • Gold also saw some support from the Greek crisis. Athens and its international creditors remain deadlocked over a debt deal.
  • Euro zone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated and government revenue slumped.
  • Switzerland’s gold exports fell to their lowest since August last year in May, data from the Swiss Customs bureau showed, as shipments to major consumers India, China and Hong Kong dropped.
  • South African gold producers said on Thursday they would present unions with a package of welfare-boosting measures when wage talks begin next week, but the unions said they were · interested only in money.
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