Gold, silver slide on profit-booking by Chinese investors

Gold fell from near-two-week highs and silver slumped 3 per cent on Thursday, as Chinese investors sold the precious metals to take profits on return from a week-long holiday.

Spot gold eased 0.2 per cent to $1,143 an ounce by 0315 GMT. The metal had climbed to $1,153.30 in the previous session, its highest since September 24, before closing 0.1 per cent lower as the dollar gained.

Silver fell as much as 3.2 per cent before recovering slightly to trade down 2.6 per cent at $15.65. Before Thursday, silver had rallied for four days, hitting a 3-1/2-month high earlier this week.

Gold gained $30 an ounce during China’s holiday between October 1 and October 7, while silver gained about $1.50 in the same period, as the dollar weakened on sluggish US economic data.

“There is some profit-taking from the Chinese as both the metals moved considerably higher when they were away,’’ said a bullion trader in Sydney.

Platinum and palladium also fell.

Gold’s losses were capped by views that the Federal Reserve would delay the first rate hike in nearly a decade until 2016, and the trader said he was bullish about prices in the near term.

“After the weak non-farm payrolls report last week, expectations for a US rate hike have been pushed to early next year. So the market does look good for now,’’ he said.

The US central bank opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China.

Fed rate hike

Fed Chair Yellen said a rate hike would come this year, but a recent string of weak US economic data has prompted the market to push back expectations.

The minutes from the Fed’s last meeting in September will be released later on Thursday, with markets watching out for US central bank officials’ views on the global economy and the impact on US monetary policy.

A delayed rate rise could support gold in the near term. The metal had earlier come under pressure from expectations that the Fed may raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion.

Elsewhere, SPDR Gold Trust, the top gold-backed exchange-traded fund, said its holdings fell 0.26 per cent to 687.20 tonnes on Wednesday.