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Gold jumps on report China may slow U.S. Treasury buys

Reuters  |  NEW YORK/LONDON 

By and Jan Harvey

NEW YORK/(Reuters) - Gold rose on Wednesday, hitting its highest in nearly four months as the dollar swooned after a report that Chinese officials had recommended slowing or halting purchases of securities.

The dollar, already under pressure versus the Japanese yen after the moved to trim its long-dated government bond purchases this week, was on track to post its biggest single-day drop against the yen in seven weeks. The greenback also lost ground against a basket of major currencies.

Spot gold was up 0.5 percent at $1,318.67 an ounce by 1:41 p.m. EST (1841 GMT). Its session high of $1,326.56 was its highest since Sept. 15. U.S. gold futures for February delivery settled up $5.60, or 0.4 percent, at $1,319.30 per ounce.

yields jumped to 10-month highs after reported that Chinese officials have recommended the country slow or halt its purchases of the U.S. bonds. Rising Treasury yields can pressure prices for gold, but the dollar's slide helped gold shrug off the impact.

The report "added pressure on the and helped gold," said Bart Melek, at in "Gold did better, despite the fact that the yields across the curve moved higher," he said.

"With bond yields going up so steadily and looking like they're going higher that could be a bit of a headwind given the fact that gold is a non interest-bearing asset," said Bill O'Neill, partner, of in Upper Saddle River,

A possible slow-down or halt to purchasing yields could have significant repercussions, ONADA said in a note.

"The tightening effect of such measures would likely have an impact on how many times the Federal Reserve raises interest rates this year, which is why we've seen a corresponding drop in the dollar," said.

Among other metals, palladium dropped 1.5 percent at $1,083.97 an ounce, after hitting a record high on Tuesday at $1,111.40. Tightening emissions standards and a switch away from diesel cars to more palladium-heavy gasoline models has shored up demand expectations for the

Platinum was up 0.9 percent at $973.60 an ounce, after hitting a nearly four-month high of $973.90.

Silver was up 0.4 percent at $17.01 an ounce, after earlier drifting to $16.86, its lowest since Dec. 29.

(Additional reporting by in Bengaluru; Editing by David Gregorio, and David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 00:43 IST