Picture: ISTOCK
Picture: ISTOCK

London — Gold hit four-week lows on Monday as the dollar held firm and the market waited for comments from a top Federal Reserve official on US monetary policy, but prices were supported by the start of talks on the terms of Britain’s departure from the EU.

Spot gold was down 0.2% at $1,251/oz by 8.52am GMT, up from an earlier $1,248.63, its lowest since May 24. US gold futures fell 0.3% to $1,252.5.

New York Fed president William Dudley is due to take part in a roundtable with local business leaders later on Monday.

Dudley’s comments, if hawkish, could reinforce the dollar’s uptrend, which when it rises makes dollar-denominated commodities more expensive for holders of other currencies, potentially weakening demand.

"The dollar is a large part of what’s going on with gold," said ING commodities strategist Warren Patterson. "I do see some support from uncertainty about the UK government and the start of Brexit negotiations."

British Prime Minister Theresa May failing to win a parliamentary election earlier in June has, alongside Brexit negotiations starting on Monday in Brussels, fuelled political uncertainty.

Weighing on gold is a drop in holdings of physically backed exchange traded funds (ETFs) to 55.231-million ounces from 55.654-million ounces last Wednesday, when the Fed raised rates and pushed the dollar index to two-week highs.

On the technical front, support for gold kicked in at $1,248, near the 100-day moving average, and resistance sat at $1,260, near the 55-day moving average, traders said.

"There’s very strong support at the 200-day moving average, just below $1,240," one trader said.

Elsewhere, palladium was up 1.5% at $873.65/oz. Earlier in June the metal used to make autocatalysts for petrol-fuelled cars hit a 16-year high at $914.70/oz as the market fretted about shortages in the near term.

But analysts say palladium’s gains of more than 25/oz so far in 2017 may not be justified given slowing car sales.

"There are some concerning signals from the two largest [petrol] (palladium) auto markets, the US and China," ICBC Standard Bank analysts said in a note.

"The pace of sales growth in both countries has slowed sharply this year. There are a several reasons why, namely credit, a maturing business cycle, and reduced incentives."

US passenger car sales fell 9.8% in May from a year earlier. In China the drop was 0.1%, but the expectation is for further falls over coming months.

Silver gained 0.3% to $16.63/oz and platinum slid 0.2% to $922.50/oz.

Reuters

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