(Nov 5): Gold rebounded after the biggest drop in more than a week, as a wider risk-off tone across financial markets boosted demand for havens.
Spot bullion rose towards US$3,950 (RM16,581) an ounce, after sinking almost 2% in the prior session as a gauge of the US dollar rose for a fifth day. Global stocks extended losses on Wednesday after suffering their steepest drop in nearly a month, on concerns over elevated valuations. Most other commodities also fell.
Gold remains about 50% higher year to date, with prices touching a record last month, before retracing some gains. The pullback — which followed a slew of signals that the ascent had been too rapid — was accompanied by withdrawals from bullion-backed exchange-traded funds (ETFs). Traders are now trying to assess whether the metal’s drop has run its course.
“It should not be a big surprise to see the yellow metal consolidated in a lower, US$3,800-to-US$4,050-an-ounce trading range,” TD Securities strategist Bart Melek said in a note, citing factors including ambiguities over the outlook for US Federal Reserve rate cuts, as well as concerns over retail buying in China.
Still, the factors that contributed to gold’s gains this year are still mostly intact, and elevated official-sector buying and strong demand from private investors should send prices back up after the consolidation phase, he added.
Gold was 0.4% higher at US$3,948.85 an ounce at 9:41am in Singapore. The Bloomberg Dollar Spot Index was steady, after closing at the highest level since mid-May. Silver was flat, while palladium and platinum dropped.
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Earlier this week, a trio of Fed policymakers stopped short of supporting an additional cut in December, as they weighed the competing risks from inflation and a softer labour market. Investors will then have opportunity to hear additional viewpoints this week, with St Louis Fed president Alberto Musalem and Cleveland Fed chief Beth Hammack among officials slated to make remarks.
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