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Gold prices rebound in Asia as investors see bargains after shar falls

© Reuters. Gold prices rebound in Asia

Investing.com - Gold prices rose smartly in early Asia on Monday with investors noting prospects for the Feederal Reserve to raise rates later this year, but also seeing bargains after a series of sharp falls.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose 0.91% to $1,095.90 a troy ounce.

Also on the Comex, silver futures for September delivery gained 0.95% to $14.625 a troy ounce. Silver prices lost 34.2 cents, or 2.33%, on the week, the fifth consecutive weekly decline.

Elsewhere in metals trading, copper for September delivery fell 0.48% to $2.376 a pound after hitting a session low of $2.350, a level not seen since June 2009.

Last week, gold futures sank to the lowest level in more than five years on Friday, as ongoing expectations that the Federal Reserve will hike interest rates at its September policy meeting weighed.

Gold has been under heavy selling pressure in recent months amid speculation the Fed will raise interest rates for the first time in nine years as soon as September.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Copper sold off on Friday after private sector data showed that manufacturing activity in China slowed to a 15-month low in July, fueled fears over slackening demand for the industrial metal.

The preliminary reading of the Caixin/Markit manufacturing purchasing managers’ index fell to 48.2 from a final reading of 49.4 in June. It was the lowest reading since April 2014.

For the week, copper prices plunged 11.5 cents, or 4.57%, the fourth consecutive weekly fall, as concerns over the health of China's economy drove down prices.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

The dollar has been boosted by expectations that the U.S. central bank could raise rates as soon as September if the economy continues to improve as expected.

In the week ahead, market players will focus on the outcome of the Federal Reserve's highly-anticipated policy meeting on Wednesday as well as the release of preliminary second quarter growth data on Thursday.

The Federal Reserve said Friday it inadvertently released confidential staff economic projections to its public Web site June 29 and then made the information public - and then, Friday night, issued a corrected version.

The staff estimates projected the federal funds rate at 0.35% in this year's fourth quarter, up slightly from the current range of zero to 0.25%, suggesting to some analysts that the change was a reflection of the possibility of liftoff before year end.

For next year the nominal Fed funds rate goes to 1.26% by the fourth quarter, 2.12% by the end of 2017, 2.80% by the end of 2018, 3.17% by late 2019 and 3.34% in the fourth quarter of 2020.

Estimates of long-run inflation expectations for 2015 to 2017 were 1.80%, 1.83% in 2018, 1.86% 2019 and 1.88% in 2020.

The Fed said the information is part of code uploaded about every three months to feed into the Fed's model of the U.S. economy "including a set of illustrative economic projections."

Meanwhile, investors will continue to monitor progress in Greece’s €86 billion bailout negotiations. Athens is aiming for a deal by mid-August.

On Monday, the U.S. is to release data on durable goods orders.


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