Picture: BLOOMBERG
Picture: BLOOMBERG

Bengluru — Gold prices dipped on Wednesday, retreating from a more than five-week top hit in the previous session, as the dollar crawled higher.

Spot gold was down 0.3% at $1,234.71 an ounce as of 4.22am GMT, after hitting its highest since October 26 at $1,241.86 an ounce in the previous session. US gold futures were down 0.5% at $1,240.2 an ounce.

“Gold is mainly tracking the US dollar,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.

“Today’s move in gold prices is a correction because yesterday prices were up quite a bit.”

The dollar index, which measures the greenback against a basket of six major currencies, edged up about 0.1%, even though the US currency was under pressure as declining Treasury yields raised concerns over economic growth.

The benchmark 10-year Treasury yield fell to its lowest point since mid-September. The spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008, signalling to some investors an approaching economic slowdown.

Concerns about weaker growth have stoked bets that the Federal Reserve will end its campaign to raise interest rates sooner than previously thought, analysts said.

US Federal Reserve chair Jerome Powell said last Wednesday that US interest rates were nearing neutral levels, which markets interpreted as signalling a slowdown in rate hikes.

Asian equities dipped in line with Wall Street as resurgent trade concerns stoked worries about global economic growth.

US President Donald Trump on Tuesday held out the possibility of an extension of the 90-day trade truce with China, but warned he would revert to tariffs if the two sides could not resolve their differences.

“Normally you would expect a better outing from gold given the absolute beatdown in stocks, but this is a baby step for the precious metal,” said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi.

“Gold at this point will correct a little more. $1,242.5 is the level gold has to test before it goes up to the next level. The downside we are looking at is $1,230,” GoldSilver Central's Lan said.

Meanwhile, palladium retreated 0.5% to $1,226.49 an ounce, trading in close proximity to the yellow metal and after notching its record high hit on Tuesday.

Spot silver fell 0.4% to $14.46 an ounce, while platinum was 1.8% lower at $788.90 an ounce after hitting its lowest level since September 17 at $787.5 earlier in the session. 

Reuters