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LONDON, June 26: Gold rose 1.5 per cent in Europe on Thursday, supported by a softer dollar after the US Federal Reserve’s decision to leave interest rates unchanged, and as traders scaled back expectations for further rate rises.
Gold rose to $893.90/894.90 an ounce from $879.60/880.60 an ounce late in New York on Wednesday, when it dropped to its lowest level in a week -- $873.50 -- due to weaker oil prices.
Gold is only really moving with the dollar at the moment, said Fairfax analyst John Meyer. Sentiment is still that the dollar will continue to weaken for a while.
But while prices remain firm, gold is unlikely to find much impetus to push higher in the near future and should remain rangebound under $900 an ounce, said Standard Bank analyst Walter de Wet.
Demand is likely to remain sluggish over the summer, he said, while weakness in the euro zone should limit losses in the dollar.
Oil, the other main external driver of gold prices, was steady above $134 a barrel, after slipping yesterday as the US Dept of Energy reported an unexpected rise in stockpiles.
In industry news, Gold Fields Limited said it has shut down a shaft of its Kloof Gold Mine in South Africa after two employees were killed early on Thursday following an earth tremor. It is unclear how much production will be affected by the closure.
Meanwhile spot platinum rose to $2,036.00/2,056.00 an ounce from $2,004.50/2,024.50 late in New York.
The white metal has bounced back from the near two-week low it hit yesterday as oil prices slid.
However, with the outlook for the automotive industry - a key user of platinum - remaining relatively sluggish, the metal could remain under pressure.
Weaker final demand is preventing platinum from rallying, said Standard Bank in a weekly report yesterday.
We expect this trend of lower vehicles sales in major markets to continue over the coming months.
Given that we do not anticipate any new supply problems for platinum, the main driver for prices will have to come from investment demand, they added.—Reuters
