Gold steadies after rout

Gold steadies after rout

Gold steadies after rout

Written by Staff Writer

21 Jul, 2015 | 12:26 pm

Asian shares edged higher on Tuesday July 21, taking heart from fresh highs on Wall Street, while gold prices took back some lost ground after plunging more than 4% to five-year lows in the previous session.

“Although companies won’t likely change their full-year forecasts this time,” investors are keen to see business plans are on track, said Masayuki Kubota, chief strategist at Rakuten Securities. “Most of them expect to confirm that companies’ earnings are resilient.”

Spot gold XAU= added about 0.6 percent on the day to $1,103.28 an ounce, after what traders described as a mini flash crash in the previous session.

“The decline in gold prices is consistent with the drop in the VIX and the rise in equities that took the Nasdaq to a record high,” Kathy Lien, managing director at BK Asset Management said in a note to clients.

“It signals to FX traders that there is a sense of calm in the markets,” she said.

Part of that calm is due to a more stable situation in Greece, where banks reopened as Athens began the process of paying off billions of euros owed to international creditors after it agreed to a new reform plan in exchange for another bailout to keep it in the euro zone.

Investors also have less incentive to hold gold, as the dollar strengthens ahead of an expected increase in U.S. interest rates later this year, the first in nearly a decade.

Underpinning the greenback, St. Louis Fed President James Bullard told Fox Business Network that there was a better than 50 percent chance that the U.S. central bank will raise interest rates in September.

The dollar jumped to its highest since April 23 against a basket of major currencies .DXY on Monday, before paring gains and ending flat, and was last steady on the day at 98.051 in Asian trading.

The euro edged up slightly on the day to $1.0826 EUR=EBS, after dipping to its lowest since mid-April overnight.

The dollar added about 0.1 percent against the yen to buy 124.36 JPY=EBS after earlier matching a 4-1/2-week peak of 124.390 yen scaled on Monday.

In other commodities trading, crude oil futures continued to slip, pressured by the strengthening dollar and concerns about a supply glut.

U.S. August crude CLc1, set to expire later on Tuesday, was down about 0.4 percent at $49.96 a barrel, back under the $50 threshold after it tumbled below it for the first time since April on Monday.

rent LCOc1 slipped 0.3 percent to $56.51.

Source : Reuters

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