Although gains
were modest as investors remained cautious after the U.S. Federal Reserve's
hawkish stance, gold prices were higher in Asian trade on Thursday due to a
slightly weaker dollar as markets resumed trading after the Christmas holiday.
Additionally,
traders avoided making big wagers during a week with fewer holidays, which led
to low transaction volumes.
By 00:00 ET
(05:00 GMT), gold futures expiring in February increased by 0.1% to $2,643.86
an ounce, while spot gold increased by 0.4% to $2,627.55 an ounce.
Bullion's advances were also influenced by geopolitical tensions in the Middle
East.
Israel and Hamas, the Palestinian militant group, accused one another on
Wednesday of impeding a ceasefire agreement. Israeli Prime Minister Benjamin
Netanyahu accused Hamas of setting new requirements. reneged on prior
understandings.When the market is uncertain, gold is viewed as a safe haven
asset.
The US
dollar declines but stays close to its two-year high.
Despite a
modest decline in Asian trade on Thursday, the dollar index remained close to
the two-year high it reached last week.
Since higher interest rates raise the value of the currency by increasing
yields on dollar-denominated assets, the Fed's hawkish move last week gave the
dollar new momentum.
Gold prices are
frequently impacted by a higher dollar since it increases the cost of the
yellow metal for purchasers who use other currencies.
Following the
Fed's policy meeting last week, which revealed that interest rates will stay
high for an extended length of time, gold prices plummeted.
Gold is under
pressure to decline due to higher interest rates because of the opportunity
cost of gold increases, making it more attractive compared to interest-bearing
assets like bonds
The yellow
metal has seen marginal moves this week, after losing more than 1% in the
previous week, reflecting uncertainty about the metal’s outlook. other precious
were largely steady on Thursday. Platinum Futures were unchanged at $960.20 an
ounce, while Silver Futures were muted at $30.273 an ounce.
On China
stimulus, copper rises, but gains are capped by a strong dollar.
In an increased
fiscal attempt to boost a faltering economy, Chinese authorities intend to
issue a record-breaking 3 trillion yuan ($411 billion) in special treasury
bonds next year, according to a Reuters story, which caused copper prices among
industrial metals to slightly increase.
As a strong dollar weighed in, the red metal was unable to completely profit
from this news.
The decline in copper was also ascribed by analysts to seasonal sluggishness,
as construction projects and industrial activity tend to slow down as companies
and projects get ready for holidays and year-end closures.
The Shanghai
Futures Exchange's (SHFE) most-traded January copper contract, Copper Futures,
up 0.2% to 74,220 yuan per ton. The London Metal Exchange's benchmark copper
contracts were closed.
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