Gold, silver trade higher in early trade

Posted March 19, 2017

Bullion traders said a firm trend overseas despite the rate hike by the US Federal Reserve amid increased buying by local jewellers, mainly led to a rally in gold prices.

The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent after posting its second-biggest daily gain this year in the previous session.

This, as the US dollar hit a five-week low following the Federal Reserve's cautious message on interest rates, thus making bullion cheaper for holders of non-U.S. currencies.

Across the Atlantic, European stocks rose on Thursday after far-right candidate Geert Wilders was defeated in a closely watched Dutch election, pouring cold water on fears that a populist wave was sweeping the continent.

Investors lodged large bets on the dollar after Donald Trump's USA presidential election win a year ago, expecting his mix of tax reform, capital repatriation and new public spending to raise inflation in the United States and in turn drive Fed rates higher. "The surge we've seen in the last couple of days has been correlated with what we've seen in bonds and stocks", said Rob Haworth, senior investment strategist for US Bank Wealth management in Seattle.

The two-year Treasury yield rose to 1.31% from 1.30%, and the 30-year yield rose to 3.13% from 3.11%. Some investors had begun to speculate that four increases may be possible given how much the economy and inflation have picked up.

Citizens of the Netherlands voted yesterday, Wednesday 15 March, and the outcome may have a huge impact on the exchange rate.

"This was the best scenario indeed, because the Fed is confident enough to hike, confident enough in the US economic performance but it also doesn't sound in the mood to take away the punch bowl".

MPs vote down the Lords over Theresa May's Brexit bill
May cleared the last major hurdle to Brexit on Monday, when parliament rejected the amendments from the House of Lords and voted to approve the trigger to Article 50 .

Indonesia's central bank, also scheduled to release its latest decision on Thursday, is expected to keep its benchmark interest rate unchanged in a bid to spur economic growth.

Futures for the S&P 500 pointed to a strong opening on Wall Street. Meanwhile, Sydney's S&P-ASX 200 rose 0.2%.

A sharp recovery in the oil price provided most of the impetus, boosting energy stocks.

Following gold, silver ready flared up by Rs 1,050 to Rs 41,350 per kg and weekly-based delivery by Rs 1,040 to Rs 41,010 per kg.

MARKETS ABROAD: France's CAC 40 rose 0.2 percent, Germany's DAX index was close to flat and the FTSE 100 in London rose 0.3 percent.

Spot gold had edged up 0.1 percent to $1,199.34 per ounce by 0040 GMT.

The pound dipped against the euro this week as the Brexit bill allowing the Government to trigger Article 50 passed through the Houses of Parliament with no amendments.