SINGAPORE: After a five-day rally, gold edged lower but stayed close to a 2-1/2-week high. The rally was on growing expectations the U.S. Federal Reserve would not raise interest rates until September. Spot gold had eased 0.4 percent to $1,188.15 an ounce by 0329 GMT, but was not too far from a peak of $1,195.30 reached the session before.
Earlier, the Fed sounded a cautious note last week on the U.S. economy and the pace of any rate-hike. “For the rest of this month, markets (will be) adjusting to the reality that the Fed is more dovish than previously expected,” said Phillip Futures analyst Howie Lee, adding that this would continue pushing gold prices higher.
Lee said prices could climb to $1,200 in the immediate future and$1,240 in the next quarter. Demand for gold, a non-interest paying asset, had been hurt by expectations of a near-term rate hike.
Investors rushed to cut long dollar positions after the Fed’s dovish steer on interest rates, sending the greenback crashing back from multiyear highs. The dollar stabilised against a basket of major currencies.
