Singapore: Gold advanced as the likelihood of an interest-rate increase in the US diminished following Britain’s vote to quit the European Union.
Bullion for immediate delivery rose as much as 0.7 per cent to $1,321.30 (Dh4,849.17) an ounce and traded at $1,320.09 at 11:05am in Singapore, according to Bloomberg generic pricing. The metal retreated 1 per cent on Tuesday after a 5.4 per cent surge following Friday’s Brexit result, which was its biggest two-day jump since January 2009.
Gold is trading near its highest level in more than two years and is heading for a second quarterly gain as investors abandon risk assets and turn to havens amid concerns that Brexit could disrupt the world’s economic recovery. Federal Reserve Governor Jerome Powell said Tuesday that global risks have shifted further to the downside after the referendum, introducing new uncertainties that may merit reassessing monetary policy.
Traders are now pricing in a greater probability that the Federal Reserve will cut rates in upcoming meetings rather than raise them. They don’t assign more than a 50 per cent chance of an increase until the beginning of 2018, Fed funds futures show. A gauge of the dollar held its decline.
ETFs expand
“After Brexit, the market already priced in the fact that we’re probably not going to see any interest-rate hike, which is why gold rallied quite strongly besides the fact that it’s a safe haven asset,” Bernard Aw, a strategist at IG Asia Pte, said in an interview. “I’d still see risk aversion driving gold forward in probably the next few weeks.”
Holdings in gold-backed exchange-traded funds rose 5.6 metric tonnes to 1,940.3 tonnes as of Tuesday, the highest level since September 2013, data compiled by Bloomberg show. Investors have added 35.7 tonnes to ETFs in the past three days, the biggest such increase in four months.
