Gold hits 5-month peak as dollar dips on China reopening hopes

Follow us on Google News:

By Ashitha Shivaprasad


(Reuters) - Gold prices rose to a five-month high on Monday, as the U.S. dollar weakened slightly after more Chinese cities relaxed COVID-19 restrictions over the weekend.

Spot gold was up 0.5% at $1,807.21 per ounce, as of 0233 GMT, after climbing to its highest level since July 5 at $1,808.20 earlier in the session. U.S. gold futures gained 0.6% to $1,819.60.

The dollar index was down 0.2%, hovering near five-month lows. A weaker dollar makes greenback-priced bullion cheaper for overseas buyers. [USD/]

"The market still expects the Fed to slow their pace of tightening, which is providing support to gold," said City Index analyst Matt Simpson, referring to the strong jobs data.

Data released on Friday showed U.S. employers hired more workers than expected in November and increased wages, shrugging off mounting worries of a recession, but that will probably not stop the Federal Reserve from slowing the pace of its interest rate hikes starting this month.

Market participants are pricing in a 91% chance of a 50-basis point rate hike at the Fed's meeting this month.

Lower interest rates tend to be beneficial for gold as it reduces the opportunity cost of holding the non-yielding asset.

"Also, news that China is scaling back its COVID restrictions means that gold demand will increase in the region, further supporting prices," said Simpson.

More cities in top gold consumer China announced an easing of coronavirus curbs on Sunday as the country tries to make its zero-COVID policy more targeted and less onerous after unprecedented protests.

The London Bullion Market Association is creating a database of Russian gold bars held by banks in London to help prevent sanctions evasion by Russian companies or the Russian central bank, the industry group said on Friday.

Spot silver gained 1.1% to $23.37, platinum rose 1.1% to $1,024.96 and palladium edged up 0.7% to $1,911.82.

(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu)

Disclaimer

The above content is directly sourced from Reuters under a contractual arrangement. The content is being provided as a convenience and for informational purposes only; and does not constitute an endorsement or approval by Kalkine Media of any of the products, services, or opinions of the organization or individual. The user is apprised that Kalkine Media bears no responsibility for the accuracy, legality, or content of Reuters, any external sites, or for that of subsequent links. The user is requested to contact Reuters directly for answers to questions regarding the content. Please note that Kalkine Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Featured Articles