Gold is steady in cautious trade ahead of French polls
Bengaluru — Gold held steady on Friday with tension surrounding upcoming French elections underpinning the safe-haven demand, but the metal was on track for its first weekly drop in six.
Spot gold was down 0.1% at $1,279.80/oz, as of 3.43am GMT. US gold futures slipped 0.2% at $1,281.60.
Security concerns took centre stage on Friday in the last days of France’s tight presidential race in the wake of a shooting in Paris which killed one policeman. Polls ahead of the two-round French presidential vote, which begins on Sunday, give both far-right and far-left candidates a chance of making it into next month’s run-off, although centrist candidate Emmanuel Macron is shown in the lead.
"I would expect investors to stay on the fence ... they would likely be market-watching rather than market-trading ahead of the French elections on Sunday, especially when there is no clarity," OCBC analyst Barnabas Gan said, adding polls could be unreliable. "Into the near term, if the geopolitical tensions intensify, there is a chance that gold prices will reach $1,300 or more."
Dallas Federal Reserve president Robert Kaplan said on Thursday that two more interest rate increases this year remained possible but that the US central bank had the flexibility to wait and see how the economy unfolded. New applications for US jobless benefits rose slightly more than expected last week, but a drop in the number of Americans on unemployment rolls to a 17-year low suggested the labour market continues to tighten. Higher rates could dent the demand for nonyielding gold.
"From a chart perspective, gold appears to have run out of momentum, having made a series of lower highs over the past few days," said Oanda senior market analyst Jeffrey Halley.
"Assuming the weekend passes without surprises election-wise, there is potential for a correction on Monday as safe-haven hedges are lightened."
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), said its holdings fell 0.76% to 854.25 tonnes on Thursday. The outflows follow a 11.8 tonnes rise on Wednesday, the biggest one-day inflow since September.
"Gold struggled to hold this week’s gains as the dollar strengthened and concerns over global risk eased. However, selling was relatively muted, which suggests a period of consolidation is now upon us," ANZ analysts wrote in a note.
Spot silver declined 0.3% to $17.94/oz, extending losses into the fifth session. Silver has fallen about 3% so far this week. Platinum slipped 0.5% to $972.10, while palladium fell 0.3% to $797.50, after rising over 3% in the previous session.