Gold on track for biggest weekly loss in more than four months | Reuters - Firstpost
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Gold on track for biggest weekly loss in more than four months | Reuters

Updated: Mar 24, 2016 20:00 IST

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LONDON Spot gold rebounded after hitting a four-week low on Thursday, but prices were still poised for their biggest weekly loss since November as the prospect of more U.S. interest rate rises has bolstered the dollar.

Hawkish comments from several U.S. Federal Reserve officials this week put investors on guard for the possibility of at least two rates increases this year, with the first potentially as soon as next month, triggering a widespread correction across commodities.

Brent crude oil plunged 3 percent this week, while copper prices fell below $5,000 a tonne.

Spot gold slipped 0.6 percent in early trade on Thursday to $1,212.20 an ounce, its weakest since Feb. 26, before rebounding to $1,220.36, up 0.1 percent, by 1308 GMT, as the dollar pared some gains after weekly U.S. jobs data.

Gold was on track for a 2.6 percent weekly loss, largely because of Wednesday's 2 percent decline. London and many other gold markets will be closed on Friday and Monday for the Easter holiday.

Liquidity was thinning ahead of the holiday break.

U.S. gold slipped 0.2 percent to $1,221.90 an ounce.

"In February there were a lot of concerns about a dovish stance from the Fed, while economists are now starting to figure that there could be two (rate rises) and that would mean some pressure on gold," ING Bank senior strategist Hamza Khan said.

The dollar was up 0.2 percent versus a basket of main currencies, heading for a fifth day of gains, its best run in almost a year.

Data on Thursday showed the number of Americans filing for unemployment benefits rose modestly last week, but revisions for prior weeks showed the labour market was much stronger than previously thought.

St. Louis Fed President James Bullard joined a chorus of officials in highlighting the possibility of at least two rate increases this year, with the first perhaps as soon as April.

Earlier in the week, Philadelphia Fed President Patrick Harker said the central bank should consider another increase as early as next month if the U.S. economy continues to improve, while Chicago Fed President Charles Evans also said he expects two more rate increases this year.

The comments pushed investors to cut long positions, broker Triland Metals said in a note, with further consolidation looking likely.

"Sentiment may have gained traction fairly sharply over previous months, however the fundamentals are yet to turn a corner ... It's a tough call to the upside until we break $1,286 and $1,308."

Silver gained 0.4 percent to $15.27, platinum was up 0.3 percent to $956.90 and palladium fell 1.4 percent to $571.25.

(Additional reporting by Melanie Burton in Melbourne; Editing by David Goodman and Susan Fenton)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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