Gold loses its glitter ahead of French vote and US tax announcements
London — Gold prices were steady on Friday with investors awaiting the first round of voting in the French election at the weekend and possible announcements about tax changes in the US.
Spot gold was down 0.1% at $1,280.51 an ounce at 2.30pm GMT, on track for its first weekly drop in six. US gold future also fell 0.1% to $1,282.50.
"The big news over the weekend will be the French election and the market will, to an extent, be on hold ahead of that," said Mitsubishi commodities analyst Jonathan Butler.
There is potential for safe-haven buying of gold after France said security forces were fully mobilised for the weekend vote after an Islamist militant killed a policeman on Thursday. "Into the near term, if the geopolitical tensions intensify, there is a chance that gold prices will reach $1,300 or more," OCBC Bank analyst Barnabas Gan said.
Moving above $1,290 or $1,291 would be significant as it would break above a down-trend that has been in place since gold touched an all-time high of $1,920.30 in 2011, Butler said. Investors were also watching the US. "Over the next week or so, I think we’ll start to see whether the reflation trade is back on, which might be backed up by some announcements from the US administration on tax reform," Gan said.
US President Donald Trump’s administration will unveil a tax reform plan soon and expects it will be approved by congress this year whether a healthcare overhaul happens or not, treasury secretary Steven Mnuchin said on Thursday.
Gold is at risk of some profit-taking after a strong recent run, but should be supported by other factors, analysts said. "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.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.76% to 854.25 tonnes on Thursday. The outflows follow a 11.8-tonne rise on Wednesday, the biggest one-day inflow since September.
Spot silver slipped 1.1% to $17.84, extending losses into the fifth session. Silver has shed nearly 4% so far this week after touching a five-month peak on Monday. "Once it starts to reach these new highs and with prices above $18 as they were earlier in the week, it does present an opportunity of profit-taking for the less committed investors," said Butler.
Platinum slipped 0.6% to $971.95, while palladium fell 0.5% at $795.97 after rising more than 3% in the previous session.