Published: Sat, March 18, 2017
Business | By Sandy Mccarthy

Gold inches up ahead of US Fed rate rise clues

Gold inches up ahead of US Fed rate rise clues

MSCI's all-country world stock index .MIWD00000PUS gained 0.7 percent, and hit an all-time high.

The Dutch election was a precursor to elections in France in April and Germany in September and "revived hope that the populist movement may have not spilled over the core European Union members", Ipek Ozkardeskaya, senior market analyst at London Capital Group said. The Opinionway poll also showed Le Pen, who has pledged to take France out of the euro, narrowing Macron's lead in the second round run-off.

Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the US central bank signalled only gradual rate tightening and the dollar slid to its lowest in five weeks. Sterling rose against the dollar on Friday, as sterling was supported by signs that some at the Bank of England may be leaning toward a rise in interest rates to support the currency.

A key index of world stocks climbed to record highs while the U.S. dollar sank to a month low yesterday as investors digested the recent USA interest rate increase and indications there would be no pick-up in the pace of monetary tightening. Minutes from the Bank's latest Monetary Policy Committee meeting shocked markets on Thursday by showing one outgoing official voting for a rise in rates, and others on the verge of doing so if inflation gets much higher.

Commodities The oil market is striving to break a six day losing streak that saw Brent crude prices slump 9.1 per cent amid concerns that Saudi Arabia was not adhering to an Opec production cut deal and that increasing output by USA drillers was adding to a glut.

Elsewhere, GBP/USD rose 0.25% to 1.2389, off Wednesday's two-week peak of 1.2309.

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Data on Friday showed a steadily improving US economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.

The dollar fell 0.7 percent against a basket of key currencies and hit a one-week low against the yen, while the euro hit a session high against the greenback.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

The 10-year yield was at 2.5313 per cent from its last close of 2.524.

Global benchmark Brent added nearly 0.1 per cent to $51.77 a barrel, and was headed for a 0.8 per cent weekly gain. Benchmark Brent settled up 1.8 percent to $51.81 a barrel.

Some said looming Brexit talks also added to the geopolitical risk.Gold prices have fallen more than 5 percent since the precious metal failed to sustain a break above its 200-day moving average at around $1,261 in late February.Silver XAG= rose 2.3 percent at $17.22 an ounce.Platinum XPT= was up 2 percent at $951 per ounce while palladium XPD= was up 2.2 percent at $760, after tapping a 10-week low.

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