Silver in China rose to its highest level in nearly three years. On the Shanghai Futures Exchange, silver futures dropped 0.8%. They’re also looking at whether the Bank of England will cut interest rates later Thursday.
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Spot gold fell as much as 1.5 per cent to $1,321.79 an ounce, the lowest since July 1, and was down 1.3 per cent at $1,325.36 by 1158 GMT.
Gold touched a two-year high of $1,374.91 last week, after Britain voted to leave the European Union, as anxious investors started piling their cash into safe-haven assets. The gains were trimmed in the opening days of this week as global stocks erased losses sparked by the vote amid speculation of further stimulus from governments and central banks.
“With the BOE and the BOJ likely to implement further easing measures in due course, we expect gold to remain well bid”.
Still, the USA economy shouldn’t sustain much damage from the Brexit vote and may warrant as many as two interest-rate increases before the end of the year, Federal Reserve Bank of Philadelphia President Patrick Harker said Wednesday.
Accommodative monetary policies favour gold as well as equities because low interest rates encourage investors to opt for assets that do not rely on interest yields. Risk appetite returned to global markets, with shares rallying on expectations the Bank of England will cut rates at a meeting later today, while Japan’s Prime Minister Shinzo Abe said he planned to add fiscal stimulus following the ruling coalition’s election victory.
St. Louis Federal Reserve Bank President James Bullard speaks at 10 am ET, Atlanta Federal Reserve Bank President Dennis Lockhart at 11:15 am ET and Kansas City Federal Reserve Bank President Esther George at 1:15 pm ET.
In the wake of the United Kingdom leaving the European Union, traders believe that the U.S. Federal Reserve will delay the previously expected July interest rate increase until 2017.
A reduction in holdings in exchange traded funds (ETFs) added to the weakness, with the largest fund, SPDR, seeing a 16 ton outflow. A surge in demand for haven assets this year amid financial market turmoil following the Brexit vote in the United Kingdom, and a pause in the US Federal Reserve’s monetary tightening path, had pushed gold to its highest in more than two years.
In China, bullion of 99.99 percent purity lost 1.2 percent to 289 yuan a gram ($1,344.30 an ounce) on the Shanghai Gold Exchange. It rose about 0.9 percent on Tuesday, closing at $1,342.45, after touching a session-high of $1,345.20.
Spot gold was down 0.2 percent at $1,339.31 per ounce by 0358 GMT.
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Spot silver lost 0.4 percent, platinum dropped 0.7 percent and palladium declined 0.4 percent.
