Gold languishes near five-week low
Bullion sags as the dollar firms and global equity markets hold near a five-month crest, making bullion less appealing for investors
Bengaluru — Gold prices held close to a more than five-week low on Tuesday as the dollar firmed and global equity markets held near a five-month crest, making bullion less appealing for investors.
Spot gold fell 0.1% to $1,284.63/oz by 10.54am GMT, close to its lowest since January 25 at $1,282.50, hit in the previous session.
US gold futures fell 0.2% to $1,285.50.
The dollar stood within striking distance of a two-week high against peers on uplifting signs from the US economy and higher treasury yields.
“We have seen some signs of dollar strength sapping the appetite [for gold],” said Saxo Bank analyst Ole Hansen.
“We have had such a strong rally [in gold] since last August and now we are having the first major setback. That has attracted some profit-taking and long liquidations both in futures and exchange-traded funds.”
Gold prices have fallen nearly 5% since hitting a 10-month high of $1,346.73 on February 20.
The primary driver to gold’s downward momentum of late are expectations that the US and China will soon agree a trade deal, said ActivTrades chief analyst Carlo Alberto De Casa.
“This is boosting market sentiment and increasing investors’ willingness to take on risk,” he said.
US secretary of state Mike Pompeo on Monday said that he believed the US and China are “on the cusp” of pulling the curtains on their trade dispute.
Global equities remained near a five-month high on Tuesday, reducing demand for nonyielding bullion.
“From a technical point of view, bullion is … not too far from the $1,280 threshold, which is the first major support area for bullion in this scenario,” De Casa said.
Serving as an indicator of investor sentiment in bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), rolled backed to mid-December levels with a 0.76% fall on Monday.
Investors will be looking ahead to the European Central Bank’s (ECB) monetary policy meeting on Thursday and US nonfarm payrolls data on Friday.
Among the other precious metals, spot silver was flat at $15.08/oz.
Palladium slipped 1.1% to $1,515.61/oz, and platinum traded 0.4% higher at $838.38.