Gold loses some shine as investors book profits

Bengaluru — Gold eased on Thursday as investors booked profits after prices rose to a more than one-week high on bleak economic projections from the US Federal Reserve.

Spot gold was down 0.2% to $1,732.39/oz by 3.29am GMT, after hitting its highest level since June 2 at $1,739.68 earlier in the session.

US gold futures climbed 1.2% to $1,741.80. On Wednesday, spot gold prices rose 1.3%, their biggest daily percentage rise in more than a month, after the Fed said it would be a long road to recovery from the coronavirus-induced slump.

“We are seeing some profit-taking … But gold has gotten through the $1,725 level, which suggests that we are in a pretty bullish format right now,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

“The underlying commitment, with the Fed signalling their targets and rates are going to remain on hold through 2022, is quite positive for the gold market.”

The US central bank repeated its promise of continued extraordinary support, and also flagged the need to keep the key interest rate near zero through at least 2022.

Fed policymakers signalled the effect of the Covid-19 pandemic would echo through the economy for years to come rather than be quickly reversed as commerce reopens.

Large stimulus measures and low interest rates tend to support gold, which is often considered a hedge against inflation and currency debasement.

Among other metals, silver declined 2% to $17.88/oz, after rising 3.8% in the last session. Palladium fell 1% to $1,928.44/oz and platinum dipped 0.2% to $831.04.

Reuters