Picture: REUTERS/LEONHARD FOEGER
Picture: REUTERS/LEONHARD FOEGER

Gold prices edged up on Wednesday, supported by jitters over political uncertainty in the US ahead of a major central banking conference this week. Spot gold was up 0.2% to $1,286.77 an ounce at 9.26am GMT, after shedding 0.5% in the previous session.

US gold futures were unchanged at $1,292 per ounce.

"Gold’s kind of hanging in there before this Jackson Hole meeting. It is in a wait-and-see mode but we should have a better idea of direction by the end of this week," said Fawad Razaqzada, a technical analyst at Forex.com.

"There can be an argument made for a bearish view on gold as this stage. If the dollar were to come back due to short covering and given the rally in US stocks we saw yesterday, the buck-denominated and safe-haven metal could fall out of favour."

Markets are turning their focus to a meeting of central bankers in Jackson Hole, Wyoming, later in the week where Federal Reserve chairperson Janet Yellen and European Central Bank chief Mario Draghi are set to deliver speeches on the outlook for monetary policy and interest rates.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding nonyielding bullion, while boosting the dollar, in which it is priced. "Most of the people are now looking for hints from the Jackson Hole meeting between the central bankers," said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

"The most important thing is economic fundamentals … central banks are going to have tightening measures in monetary policies to have normalisation. So I don’t have much higher upward momentum for prices," To said.

The dollar inched lower after US President Donald Trump raised the prospect of a government shutdown as he tries to force through his plans to build a wall along the border with Mexico.

Gold usually fares well in times of geopolitical uncertainty, while stocks and the dollar generally retreat. Draghi is also due to give a speech in Germany later in the day.

Adding to political jitters that support gold, on Tuesday, the US imposed new North Korea-related sanctions, targetting Chinese and Russian firms and individuals for supporting Pyongyang’s weapons programmes.

"On the other hand, what has been supporting gold for the last six months or so is the risk aversion," To said, referring to uncertainty around the Trump administration in particular.

Among other precious metals, silver was down 0.2% to $17 an ounce, while platinum slipped 0.3% to $976.90.

Palladium lost 0.3% to $935 after touching a more than 16-year high at $940 on Tuesday.

Reuters

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