Gold slips as dol­lar in­dex climbs to 11-month high

Kuwait Times - - BUSINESS -

LON­DON: Gold eased yes­ter­day in line with a firmer dol­lar, but found sup­port around $1,225 an ounce as a sharp rally in cycli­cal as­sets like stocks and cop­per fol­low­ing Don­ald Trump’s elec­tion to the US pres­i­dency ran out of steam. The metal has shed more than $100 an ounce from last Wed­nes­day’s post-elec­tion high on the back of a surge in bond yields and sharply higher ap­petite for risk. Spot gold was down 0.1 per­cent at $1,226.20 an ounce at 1035 GMT, while US gold fu­tures for De­cem­ber de­liv­ery were up $1.40 an ounce at $1,225.90.

The dol­lar inched up to a fresh 11month high ver­sus a cur­rency bas­ket yes­ter­day, though ma­jor banks sounded slightly more di­vided on its im­me­di­ate prospects after a week-long rally driven by the post-elec­tion surge in US bond yields. “The most im­por­tant thing that we saw for gold (after the elec­tion) was that the dol­lar ap­pre­ci­ated,” LBBW an­a­lyst Thorsten Proet­tel said. “Also, yields on 10-year Trea­suries went up 50 ba­sis points, which is poi­son for gold, as a non-in­ter­est bear­ing as­set. “It seems there is some­thing of a bot­tom around $1,225,” he said. Trump’s elec­tion to the US pres­i­dency sent bond yields surg­ing to 2016 highs this week, push­ing the US dol­lar sharply higher, as in­vestors bet his ad­min­is­tra­tion’s poli­cies would stoke in­fla­tion.

Stock mar­kets sta­bi­lized yes­ter­day, with European stocks lit­tle changed after ral­ly­ing more than 3 per­cent over the past week from their post-elec­tion lows. Prices of in­dus­trial com­modi­ties like cop­per and crude oil also re­treated. Gold is also ex­pected to also be feel­ing the pres­sure from an im­mi­nent hike in US in­ter­est rates, which are tipped to rise for only the sec­ond time in nearly a decade next month. In­vestor ap­petite for gold re­mained slack, with the world’s largest gold-backed ex­change-traded fund, SPDR Gold Shares , say­ing its hold­ings fell an­other 1.5 tons on Tues­day to a 4-1/2 month low of 927.45 tons.

“ETF hold­ings have been re­duced by over 50 tons since the re­sult of the US pres­i­den­tial elec­tion was an­nounced last Wed­nes­day,” Com­merzbank said in a note. In the ma­jor phys­i­cal mar­kets, some In­dian gold traders are plac­ing bulk short-term im­port or­ders on fears that Prime Min­is­ter Naren­dra Modi might soon add curbs on over­seas pur­chases of the metal to his with­drawal of high-de­nom­i­na­tion ban­knotes in his fight against ‘black money’. Sil­ver was down 0.7 per­cent at $16.96 an ounce, and plat­inum was 0.8 per­cent lower at $928.20. Pal­la­dium was down 1.3 per­cent at $696.60.

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