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Gold may have seen a short-term peak, says analyst
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South Africa supply woes seen supporting PGM prices
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Firm dollar caps bullion's latest advance
(Updates prices)
By Arundhati Sarkar
Feb 6 (Reuters) - Gold regained some ground on Monday as
investors snapped up bullion after prices slid to a one-month
low, betting on firm safe-haven demand as recession risks linger
and with expectations of smaller U.S. interest rate hikes.
Spot gold rose 0.4% to $1,872.59 per ounce by 1201
GMT, after hitting its lowest level since Jan. 6. U.S. gold
futures also gained 0.4% to $1,883.30.
"Spot gold is seeing some buy the dip action, after being
slammed following last Friday's blockbuster U.S. jobs report,"
said Han Tan, chief market analyst at Exinity.
"As long as the Fed isn't forced to push its benchmark rates
much higher than the forecasted 5% peak, such an outlook should
ensure that bullion remains in demand."
Gold prices dropped more than 2% on Friday after data showed
U.S. job growth accelerated sharply last month.
But concerns over a slowdown remain, and that is likely to
keep demand for gold, considered a safe store of value during
uncertain times, on a firm footing this year, analysts said.
The U.S. Federal Reserve last week increased interest rates
by a quarter of a percentage point to 4.5%-4.75% after a year of
larger hikes. Gold benefits from low interest rates, which reduce the
opportunity cost of holding the zero-yield asset.
However, the "severity" of the moves in the last two days
suggests gold might have seen a short-term peak, with prices
likely to retreat to the $1,800 level, said Michael Hewson,
chief markets analyst at CMC Markets.
Capping gold's rebound, the dollar index advanced
0.4%, making it more expensive for buyers holding other
currencies. Spot silver gained 0.3% to $22.41 per ounce while
platinum was up 0.6% to $979.47.
Palladium was down 1.3% to $1,602.92.
"Among PGMs, supply disruptions in South Africa due to a deepening energy crisis should help to stabilise prices in the short term," ANZ said in a note. (Reporting by Arundhati Sarkar in Bengaluru; editing by Kirsten Donovan amd Jason Neely)
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