Gold has been reported to extend a recovery from recent lows on as its resilience below US$ 1,100 an ounce disappointed those who were expecting more a larger below estimate. It were only the expectations that USA interest rates could rise as early as September kept up pressure on Gold costs.
In the second half of this year, the metal has been found to be falling off on the prospect of high rates enabling to lift up an opportunity cost of sustaining billions while US dollar strengthens.
Gold is fortunate here for it found a support after getting slide to a 5-1/2 year low at US$ 1,077 an ounce in July.
Likewise, spot gold extended at 1.06% with US$ 1,103.46 an ounce, (after being fragile in a session high), while U.S. gold futures for December delivery were high with US$ 9.30 an ounce at US$ 1,103.40. Not to mention, Gold futures raised as much as US$ 1,104.5, (since June 21, the highest).
According to Saxo Bank’s head of commodity research Ole Hansen:
“We are seeing a few disillusioned shorts scaling back. We have been range bound since the collapse on July 20, with many recently established short positions not performing at these levels.”
The dollar turned lower with 0.08% against a basket of currencies, after which it climbed back to near 4 months.
ABN Amro analyst Georgette Boele said that while the market is still awaiting further clues on the prospect of a near-term rate rise, gold is lacking an immediate driver:
“Gold had a big move down at the end of July, and since then it has just stayed below US$ 1,100. Gold prices just need a new acceleration point. We still expect the interest rates in the U.S., and the dollar, to (provide that).”