Gold slips as traders turn their attention to equities and the dollar
Oanda’s Stephen Innes says that the newly minted gold bulls are getting nervous as they haven’t bought at good levels
17 October 2018 - 08:46
byEileen Soreng
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Bengaluru — Gold prices edged lower early on Wednesday as equities gained and the dollar firmed amid waning risk-averse sentiment, with the market awaiting minutes from the US Federal Reserve's latest policy meeting for fresh clues on the pace of interest rate hikes.
Spot gold was down 0.2% to $1,221.56/oz at 4.38am GMT, but still near a two-and-a-half-month high of $1,233.26/oz hit on Monday.
US gold futures were down 0.5% at $1,225.2/oz.
“The newly minted gold bulls are getting nervous as they haven’t bought at good levels. They were in pretty much at the top and we see those guys exiting the market,” said Stephen Innes, Asia-Pacific trading head at Oanda in Singapore.
Asian equities rose on Wednesday after upbeat US earnings reports drove a rebound on Wall Street.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1%.
The firming in equities and the dollar has led to the market discounting US President Donald Trump’s latest criticism of the Fed, which should have otherwise been supportive of gold, a Singapore-based trader said.
Trump heaped more criticism on the Fed, calling it “my biggest threat” in an interview with Fox Business Network on Tuesday.
Last week, Trump criticised the US central bank twice, saying it was raising interest rates so swiftly that it threatened the country’s economic health.
The Fed raised interest rates in September for the third time in 2018 and said it planned four more increases by the end of 2019 and another in 2020.
“The current case of interest rates normalisation is quite cemented and this is taking a little bit of the froth off gold markets,” Innes said.
The release of the minutes from the Fed’s September policy meeting is due at 6pm GMT on Wednesday.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Spot gold still targets a range of $1,208/oz-$1,217/oz, as it failed to break a strong resistance at $1,235, said Reuters technical analyst Wang Tao.
Gold, usually seen as a safe store of value during political and economic uncertainty, remains more than 10% down from its April peak after investors preferred the dollar as the US-China trade war unfolded against a background of higher US interest rates.
In other metals, silver dipped 0.3% to $14.60/oz.
Platinum was up 0.1% at $838.00/oz and palladium fell 0.3% to $1,075.97.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold slips as traders turn their attention to equities and the dollar
Oanda’s Stephen Innes says that the newly minted gold bulls are getting nervous as they haven’t bought at good levels
Bengaluru — Gold prices edged lower early on Wednesday as equities gained and the dollar firmed amid waning risk-averse sentiment, with the market awaiting minutes from the US Federal Reserve's latest policy meeting for fresh clues on the pace of interest rate hikes.
Spot gold was down 0.2% to $1,221.56/oz at 4.38am GMT, but still near a two-and-a-half-month high of $1,233.26/oz hit on Monday.
US gold futures were down 0.5% at $1,225.2/oz.
“The newly minted gold bulls are getting nervous as they haven’t bought at good levels. They were in pretty much at the top and we see those guys exiting the market,” said Stephen Innes, Asia-Pacific trading head at Oanda in Singapore.
Asian equities rose on Wednesday after upbeat US earnings reports drove a rebound on Wall Street.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1%.
The firming in equities and the dollar has led to the market discounting US President Donald Trump’s latest criticism of the Fed, which should have otherwise been supportive of gold, a Singapore-based trader said.
Trump heaped more criticism on the Fed, calling it “my biggest threat” in an interview with Fox Business Network on Tuesday.
Last week, Trump criticised the US central bank twice, saying it was raising interest rates so swiftly that it threatened the country’s economic health.
The Fed raised interest rates in September for the third time in 2018 and said it planned four more increases by the end of 2019 and another in 2020.
“The current case of interest rates normalisation is quite cemented and this is taking a little bit of the froth off gold markets,” Innes said.
The release of the minutes from the Fed’s September policy meeting is due at 6pm GMT on Wednesday.
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
Spot gold still targets a range of $1,208/oz-$1,217/oz, as it failed to break a strong resistance at $1,235, said Reuters technical analyst Wang Tao.
Gold, usually seen as a safe store of value during political and economic uncertainty, remains more than 10% down from its April peak after investors preferred the dollar as the US-China trade war unfolded against a background of higher US interest rates.
In other metals, silver dipped 0.3% to $14.60/oz.
Platinum was up 0.1% at $838.00/oz and palladium fell 0.3% to $1,075.97.
Reuters
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