Gold recovers from dip on hawkish US Fed comments
Bengaluru — Gold inched higher on Tuesday, supported by global political uncertainties, after touching a five-week low earlier in the session as a key US Federal Reserve official reaffirmed its hawkish stance on interest rate hikes.
Risk aversion due to Brexit, concern over US President Donald Trump’s ability to carry out financial reforms, election results in Europe and Middle East turmoil have provided some support for gold, said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
"We can see things are getting more complicated and investors have to take some time to put things into context," To said.
Spot gold rose 0.2% to $1,244.76 an ounce by 4.31am GMT. US gold futures were nearly flat at $1,246.60.
Spot prices touched a low of $1,242.61/oz early in the session, the weakest since May 17, after New York Fed president William Dudley reinforced the view that recent weak data would probably not derail plans to keep raising interest rates.
Late on Monday, though, Chicago Fed president Charles Evans said it may be worthwhile for the US central bank to wait until year-end to decide whether to raise rates again, and that it should move slowly to raise them and trim its massive bond portfolio.
We can see things are getting more complicated and investors have to take some time to put things into context.Mark To, Wing Fung Financial Group
British and European Union Brexit negotiators agreed how to organise talks on Britain’s exit from the EU at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline.
Gold is used as an alternative investment during times of political and financial uncertainty.
Spot gold could break a resistance at $1,248/oz and rise towards the next resistance at $1,251, as it failed to break a support at $1,243, according to Reuters technical analyst Wang Tao.
Oanda analyst Jeffrey Halley said having broken through the 100-day moving average, the 200-day moving average could be the next significant support for gold. "A daily close below here suggests we could target the May lows."
Among other metals, spot palladium rose 0.3% to $862.53/oz and platinum fell 0.1% to $921.40/oz.
Silver rose 0.7% to $16.56/oz. In the previous session, it touched $16.44, its weakest since May 18.