MARKET UPDATE
Gold prices hit record highs near $2,300.
Gold prices rose in Asian trade on Wednesday, remaining in sight of record highs amid increased safe haven demand after a devastating earthquake in Taiwan, while uncertainty over U.S. interest rates also boosted gold demand.
A broad sell-off in stock markets, as risk appetite deteriorated, also fueled demand for gold, even as the dollar and U.S. Treasury yields shot up tracking hawkish comments from top Federal Reserve officials.
Risk appetite was dealt a fresh blow on Wednesday after an earthquake in Taiwan battered the island’s infrastructure and its top chipmaking factories, while also sparking Tsunami warnings in parts of Japan.
Spot gold rose 0.3% to $2,286.40 an ounce, remaining in sight of a record high of $2,288.43 hit on Tuesday, while gold futures expiring in June rose 1.1% to $2,306.25 an ounce and were just below lifetime highs of $2,308.85 an ounce by 00:47 ET (04:47 GMT).
Firm dollar keeps yen pinned near key 152 level.
The dollar held near an over four-month peak on Wednesday, pinning the yen close to its lowest its decades though the heightened threat of currency intervention by Tokyo capped further declines in the Japanese currency.
The yuan was little changed after a private-sector survey showed China’s services activity growth accelerated in March, in a sign sentiment was staging a tentative recovery in the world’s second-largest economy.
The Japanese yen was last at 151.565 per dollar, languishing near last month’s slump to 34-year lows of 151.975 in the wake of the Bank of Japan’s historic policy shift.
While the BOJ raised rates for the first time in 17 years, policymakers’ commitment to go slow on further increases have hammered the yen especially given the still-wide Japan-U.S. yield gap.
Japanese officials have carried on with their jawboning efforts for days now in a bid to defend the currency, with the overhanging threat of an intervention presenting stiff resistance for the greenback at the 152 yen level, which some market participants see as a line in the sand.
Oil steady while market eyes geopolitical supply.
Oil prices steadied on Wednesday as investors eyed concerns around crude and fuel supplies, following Ukrainian attacks on Russian refineries and the potential for a widening of the Israel-Hamas war to more directly include Iran.
Brent crude futures for June rose 4 cents to $88.98 per barrel at 0515 GMT, while U.S. West Texas Intermediate crude futures for May dipped 4 cents to $85.11 a barrel.
Both Brent and WTI climbed 1.7% during the previous session to their highest since October.
Prices surged after an Ukrainian drone attack on another Russian refinery threatened to take even more of the country’s processing capacity offline, curbing output of gasoline and diesel fuel. Russia is among the top three global oil producers and one of the largest exporters of oil products.
Investors are also concerned that Iranian retaliation against Israel for an attack on Monday that killed high ranking military personnel could potentially lead to supply disruptions in the key Middle East producing region after it vowed revenge. Iran, who provides support of the Hamas militia fighting Israel in Gaza, is the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
“Geopolitical tensions continue to cast uncertainty on potential supply disruptions,” said IG’s market strategist Yeap Jun Rong, adding that oil prices have continued the run to a five-month high, with the trend retaining upward bias.
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