PRECIOUS-Gold rises, palladium hits record high as Fed shift hopes hurt dollar

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(Adds new details and comments, updates prices)

* Palladium touches all-time high at $1,313.24/oz

* SPDR Gold holdings highest since end-July

By Arijit Bose

BENGALURU, Jan 7 (Reuters) - Gold rose and palladium hit arecord high on Monday as the dollar was dented by expectationsthat the U.S. Federal Reserve would halt its rate-hiking cyclefor the year, lifting demand for the metals from holders ofother currencies.

"The precious metals complex is fairly well supported giventhe loose monetary turn coming out of the Fed," ING analystWarren Patterson said.

Fed Chairman Jerome Powell on Friday said the central bankwould be more sensitive to downside risks in the market, addingthat it was "prepared to shift the stance of policy" if needed.

Gold tends to gain when interest rate hike expectations easebecause lower rates reduce the opportunity cost of holdingnon-yielding bullion.

Spot gold XAU= was up about 0.6 percent at $1,292.41 perounce as of 1254 GMT. U.S. gold futures GCv1 gained 0.6percent to $1,293.90 per ounce.

The dollar .DXY weakened on growing bets the Fed wouldpause its rate hike cycle in the coming months after Friday'scomments from Chairman Jerome Powell. USD/

"We are seeing buyers returning to the (gold) market ondips," said Saxo Bank analyst Ole Hansen, adding that the dollarweakness supported prices.

Gold fell about 0.7 percent in the previous session, itsbiggest one-day decline in about two months on the back ofrobust U.S. jobs data, but has recovered since.

"The main trend remains bullish (for gold). From a technicalpoint of view, traders are now watching the two key levels of$1,277 and $1,300, which are new support and resistance levelsrespectively," ActivTrades chief analyst Carlo Alberto De Casasaid in a note.

Meanwhile, global equities which were initially perturbed byinvestors' concerns of an economic slowdown were boosted byPowell's dovish stance and staged a relief rally. MKTS/GLOB

But Saxo Bank's Hansen said demand for gold as a safe havenwould remain because "a dovish Fed is more of a potential worrythat the U.S. economy is not as strong as the market expects."

Indicating increased interest in bullion, holdings in theSPDR Gold TrustGLD , the world's largest gold-backedexchange-traded fund, also rose to 798.25 tonnes on Friday,their highest since July 31, 2018. GOL/ETF

Meanwhile, palladium XPD= was trading at a premium togold, having touched a record high of $1,313.24 earlier in thesession.

The metal, used mainly in emissions-reducing auto catalystsfor vehicles, gained 0.5 percent to $1,306.55.

"The physical market (for palladium) is so tight we areseeing ETF holdings being withdrawn in order to meet thatphysical demand from the industrial sector," Patterson added.

Among other precious metals, silver XAG= was up 0.4percent at $15.75 per ounce, while platinum XPT= rose 0.8percent to $829, having touched a more than one-month high of$831.10 earlier in the session. (Reporting by Arijit Bose and Swati Verma in BengaluruEditing by Edmund Blair and Susan Fenton) ((; Within U.S. +1 651 848 5832,Outside U.S. +91 8067495254; Reuters

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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