LONDON: Gold was little changed yesterday, hovering close to a three-week high hit in the previous session, as the impact of lower European share markets was offset by a steadier dollar. Spot gold was up 0.1 percent at $1,364.27 an ounce by 1143 GMT. It hit $1,367.33, its highest since July 11, on Tuesday and not far off a two-year peak of $1,374.91 touched on July 7 on concerns over the impact of Britain’s vote to leave the European Union.
European shares edged down, following heftier losses in Asian markets, while the dollar recovered from Tuesday’s six-week low, up 0.2 percent against a basket of currencies. A higher dollar makes gold more expensive for foreign currency holders, while a decrease in risk appetite lifts interest in the metal, seen as a safer bet.
The dollar suffered after weak US economic data undermined expectations of a near term interest rate hike. A report from the US Commerce Department on Tuesday showed inflation was still muted in the country, which together with the anemic economic growth pace in the second quarter, could encourage a cautious Federal Reserve to maintain interest rates at current levels for a while.
An increase in US interest rates would lift the opportunity cost of holding gold, which has surged about 28 percent this year on expectations the Fed would keep them unchanged. Investor attention will now shift towards the monthly US non-farm payrolls report, due tomorrow. “The weaker dollar this has helped lift the commodity complex with the exception of oil this year, but our expectation is that the US economy remains on track for reasonable growth,” Oxford Economics commodity director Daniel Smith said. “Notwithstanding a really poor GDP print, there is a probability that non-farm payrolls will be very good and that brings back rate hikes back on the agenda and therefore the dollar will strengthen and gold will come off.”
Spot gold may retrace moderately to a support at $1,358 per ounce before retesting a resistance at $1,368, as suggested by its wave pattern and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchangetraded fund, rose 0.6 percent to 969.97 tons on Tuesday.
Among other precious metals, spot platinum fell 0.3 percent to $1,157.74 per ounce, after touching $1,177.40, its highest since April 2015, in the previous session. Spot palladium dipped 1.4 percent to $704.50 an ounce, after rising to $722.90 on Tuesday, the highest since June 2015. Spot silver was down 0.4 percent at $20.53 per ounce, a day after touching a four-week high of $20.78. —Reuters