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B.and Bharat Gautam
September 20 (Reuters) – Gold rose Monday as fears over the solvency of Chinese real estate company Evergrande sparked a flight to safe investments, but gains were limited by the strength of the dollar ahead of the Fed’s meeting.
Spot gold XAU = rose 0.6% to $ 1,764.76 an ounce by 1453 GMT. US gold futures GCv1 added 0.8% to $ 1,765.40.
Investors rush to the safety of bonds as fears of Evergrande default grow, causing a drop in yields that helps gold, said Bart Melek, director of commodities strategies at TD Securities.
“People are reacting to what is happening in China, but the Fed’s meeting this week is also important. Anything that suggests a previous throttle would not be unanimous and would mean a fairly significant correction in the price of gold,” Melek said.
The Fed’s Open Market Committee meets September 21-22. USD /
Gold is seen as a hedge against inflation and currency devaluation due to the widespread incentives. A restrictive move by the Fed would therefore make gold less attractive, while a possible rate hike would also increase the opportunity cost of holding the non-interest-bearing asset.
World stocks were lower as investors worried about the risk of encroachment on the global economy from Evergrande’s troubles. MKTS / GLOB
“Undoubtedly, those fears of systemic risk … can feed the market well,” said independent advisor Robin Bhar. “We usually see flows in the dollar, in gold, in the yen when investors are concerned.”
But the dollar index weakens the attractiveness of gold for holders of other currencies = USD reached a nearly month-long high. USD /
silver XAG = rose 0.2% to $ 22.44 an ounce after hitting its lowest level since November 2020.
platinum XPT = fell 2.1% to $ 921.55 an ounce while palladium was down 3.4% to $ 1,948.24.
Autocatalyst prices are unlikely to recover until the demand environment improves, Melek said.
(Reporting by Bharat Govind Gautam and Arundhati Sarkar in Bengaluru; editing by Aditya Soni)
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