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Gold Rebounds as Speculation of Yen Intervention Weakens Dollar - BLOOMBERG
(Bloomberg) -- Gold bounced back from a three-day decline as the dollar sank and traders weighed the prospect of a fresh US military engagement in Iran.
Bullion rose as much as 2.2% to trade above $4,600, after falling 3.4% over the previous three sessions. The US dollar fell against a basket of other currencies, following speculation Japan is intervening in the foreign-exchange market to support the yen. A weaker greenback tends to boost gold, making it cheaper for buyers in other currencies.
Gold has fallen almost 13% since the war began in late February, as traders bet that central banks will need to keep borrowing costs higher to curb the inflationary impact of higher energy prices. That’s a headwind for gold, which does not yield interest.
US President Donald Trump said he was sticking with a naval blockade of Iranian ports even as oil prices hit a wartime high amid concerns the vital Strait of Hormuz would not reopen anytime soon. Axios reported earlier on Thursday that US military commanders would brief Trump about military options, signaling a resumption of combat operations is under consideration. Iran remained defiant.
Most analysts are still bullish on the precious metal, with the latest data by the producer-funded World Gold Council showing that central banks added gold holdings at the fastest pace in more than a year in the first quarter, as a slump in prices encouraged a wave of buying that more than offset sales by a handful of institutions.
“The shift in environment for gold argues for caution in gold prices, unless oil prices ease lower,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “That said, the medium-term structural case remains supported by central bank demand, reserve diversification flows.”
Spot gold rose 1.5% higher to $4,618.07 an ounce as of 4:36 p.m. in New York. Silver gained 3.3% to $73.65 an ounce. Palladium and platinum also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.8% lower after ending the previous session up 0.4%.
--With assistance from Sybilla Gross.
