NEW YORK/LONDON, (Reuters) – Gold rose to the highest in nearly four weeks yesterday as the dollar edged back from a 14-year peak and physical demand from major consumers China and India increased.
Spot gold climbed to its highest since Dec. 9 at $1,167.83 an ounce and was up 0.2 percent at $1,161.2 by 2:49 p.m. EST (1949 GMT). U.S. gold futures settled up 0.3 percent at $1,165.30. “The dollar index has consolidated and the big outflow from exchange-traded products (ETPs), which has been the biggest headwind for gold in the past few months, has stopped recently,” said Julius Baer analyst Carsten Menke. Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 1 percent to 813.87 tonnes on Tuesday.
Holdings are down about 14 percent since the U.S. presidential election in November. The dollar index retreated from its highest level since late 2002, a level reached after U.S. manufacturing data beat expectations on Tuesday. A weaker dollar increases demand for commodities priced in the greenback by making them cheaper for holders of other currencies. Gold prices held their gains after minutes from the Federal Reserve’s December meeting showed almost all of the policymakers thought the economy could grow more quickly because of fiscal stimulus under U.S. President-elect Donald Trump’s administration.
