Monday 29 May 2023
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MANILA (Aug 27): Gold steadied on Thursday after suffering its biggest fall in five weeks in the prior session as stock markets recovered, but indications that a US rate hike might happen later than expected kept a floor under prices.

Cheered by Wall Street's rebound, Asian stocks rose led by Chinese markets whose deep tumble this week fed a global rout.

"Gold has been correlated a lot with stock markets in the past couple of days due to the fear globally," said Howie Lee, an analyst at Phillip Futures in Singapore. "It's not surprising to see gold come back off as stocks stabilise."

Spot gold was up 0.1% at $1,126.65 an ounce by 0602 GMT, after dropping 1.3% on Wednesday, its steepest decline since July 20.

Bullion fell to a one-week low of $1,117.35 overnight, taking its losses this week to nearly 3%.

US gold for December delivery edged up 0.2% to $1,126.40 an ounce.

Providing some support to gold were comments by New York Fed President William Dudley on Thursday that the prospect of a September rate increase looks "less compelling" given the threat posed to the US economy by recent market turmoil.

"The world is in no state to endure a rate hike from the US at this point. It will just cause further collapse in the stock markets," said Lee at Phillip Futures.

Gold is holding above $1,100 support as US rate hike expectations this year slowly shift to December from next month, said Lee. When those expectations were tilted towards September, bullion was closer to $1,000, he said.

The precious metal is still up nearly 5% from a 5½-year low of $1,077 reached in July, but has given up more than 3% since touching a seven-week top of $1,168.40 last week.

"Turmoil across global markets did little to bring people back to gold as investors ignored the metal's haven appeal and focused on the prospect of higher US interest rates," ANZ Bank said in a note.

Investors will be eyeing key US data tonight for more clues on the rate hike timing, including a second estimate for second-quarter gross domestic product and weekly jobless claims.

A Reuters poll showed that US second-quarter GDP growth would be revised up to 3.2% from the 2.3% advance estimate last month.

Other precious metals rebounded from this week's slide.

Spot platinum climbed 1% to $986.50 and silver gained 0.6% to $14.20. Palladium gained 0.4% to $534.50 an ounce after falling to a near five-year low of $518 on Wednesday.


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