Gold rose slightly in Asian trade on July 7 after touching its highest in more than two-years in the previous session, with investors wary over renewed market moves over Brexit even as regional shares crept higher.
Spot gold, which touched its highest since March 2014 at $1,374.91 on July 6, was trading up 0.4 per cent at $1,368.80 an ounce by 0050 GMT. US gold was up 0.3 per cent at $1,370.80. Silver was up 0.5 per cent at $20.17. Asian share markets crept cautiously higher early on July 7 after upbeat US economic data took the sting out of losses in European equities and lifted Wall Street to a firmer finish.
Wall Street got a boost from Institute for Supply Management data showing US service sector activity hit a seven-month high in June as new orders surged and companies hired more workers. US benchmark and long-dated Treasury yields finished slightly higher on July 6 on profit taking after hitting record lows during the session on global growth concerns stemming from Britain’s recent vote to exit from the European Union. Federal Reserve policymakers decided in June that interest rate hikes should stay on hold until they have a handle on the consequences of Britain’s vote on EU membership, according to the minutes from the Fed’s June policy meeting released on July 6.
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US short-term interest rate futures contracts pared losses slightly on Wednesday after the Fed released minutes of its June meeting that suggested policymakers want to wait to see the impact of Brexit before raising rates. Fed Governor Daniel Tarullo said there is no need to raise US interest rates until there is convincing evidence inflation is moving towards the central bank’s target on a sustained basis.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.03 per cent to 982.44 tonnes on July 7. It posted the biggest one-day surge in its holdings in more than six years on July 5.
Jeffrey Gundlach, the chief executive of DoubleLine Capital, said on July 6 that gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation, as well as concerns over the effectiveness of central bank policies.
ABN Amro on July 6 raised its average 2016 gold price forecast to $1,300 per ounce from $1,283 per ounce.