Commodities & Futures News

Gold Up, Investors Digest Smaller-Than-Expected RBNZ Rate Hike

By Gina Lee – Gold was up on Wednesday morning in Asia, as the dollar strengthened and the Reserve Bank of New Zealand (RBNZ) announced a smaller-than-expected interest rate hike.

Gold futures were up 0.54% to $1,793.45 by 12:01 AM ET (5:01 AM GMT), but remained below the $1,800 mark. The dollar, which normally moves inversely to gold, inched up on Wednesday and remained close to a 16-month high.

RBNZ hiked its interest rate to 0.75% and raised its long-term cash rate projection by 50 bps as it handed down its policy decision earlier in the day.

Governor Adrian Orr said at a news conference that the RBNZ would take a “cautious” approach to tightening by moving in 25 basis-point steps “for now.”

Investors also expect that newly-renominated U.S. Federal Reserve Chairman Jerome Powell will speed up monetary tightening, including asset tapering and interest rate hikes, to curb ever-rising inflation.

Across the Atlantic, the U.K.’s manufacturing purchasing managers’ index (PMI) was 58.2, and the services PMI was 58.6, in October. The higher-than-expected data could pave the way for the Bank of England to hike interest rates in December.

In an indication of sentiment, SPDR Gold Trust said its holdings rose 0.6% to 991.11 tons on Tuesday from 985 tons on Monday.

In other precious metals, silver was down 0.3% and palladium jumped 1.2%. Platinum rose 1.1%, with the World Platinum Investment Council expecting a larger-than-expected surplus in the global platinum market in 2021 than previously forecast and another big oversupply in 2022.


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