GOLD STEADY, OIL LOWER

GOLD PRICES held their ground yesterday, with gains capped by expectations of monetary policy tightening in the US.

Spot gold price rose 0.1 percent to $1 819.41 (about R27 917) an ounce by 5.26pm while US gold futures also edged up by 0.1 percent to $1 818.80. US markets were closed for a public holiday.

“A tightening money policy could have negative impacts on gold, but despite that gold has been holding up very well. I think it’s mainly because the overall Fed (US Federal Reserve) balance sheet is still at elevated levels,” said Xiao Fu, head of commodities markets strategy at Bank of China International.

While considered an inflationary hedge, gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.

US 10-year Treasury yields hit twoyear highs last week on expectations for higher interest rates.

The focus is now on the US Federal Reserve’s January 25-26 meeting after policymakers signalled that they would start raising interest rates in March to tame inflation.

“Market participants are likely to refrain from buying gold ahead of the US Fed’s first rate hike,” Commerzbank analysts wrote in a note.

“They may be hoping that the Fed’s meeting next week will give them further and/or clearer signals that the Fed will be commencing its rate hike cycle in March.”

Elsewhere, spot silver price was up 0.1 percent at $22.97 an ounce, platinum gained 0.4 percent to $974.32 an ounce and palladium rose 0.5 percent to $1 887.19 an ounce.

Oil prices were steady as investor bets that global supply will remain tight amid restraint by major producers were offset by a rise in Libyan output. Brent crude was 0.1 percent lower at $85.94 a barrel by 4.20pm.