Gold pres­sured by firm dol­lar, vul­ner­a­ble to down­side

Kuwait Times - - BUSINESS -

Gold was barely changed yes­ter­day, but some an­a­lysts say there is scope for fur­ther down­side af­ter bul­lion en­dured its worst month of losses since June 2013. Gold has shed about 7 per­cent in Novem­ber and an­a­lyst Daniel Briese­mann at Com­merzbank in Frank­furt reck­ons that bul­lion has not yet sta­bi­lized. “Re­cently there’s been a perfect storm against gold with higher risk ap­petite, ris­ing stock mar­kets and bond yields, mas­sive ETF (ex­change traded fund) out­flows and the with­drawal of spec­u­la­tive fi­nan­cial in­vestors,” he said.

“We don’t think this is over yet. Nor­mally lower prices should at­tract higher de­mand, but the In­dian sit­u­a­tion is putting the brakes on gold buy­ing.” The shock with­drawal of high-value notes to fight “black money” in In­dia, the world’s sec­ond big­gest con­sumer of gold, has hit gold de­mand dur­ing the peak wed­ding sea­son. Spot gold yes­ter­day was down 0.1 per­cent at $1,187.67 an ounce at 1100 GMT. US gold fu­tures fell 0.1 per­cent to $1,186.70.

Bul­lion has lost $150 from a Nov 9 post US elec­tion high of $1,337.40 per ounce, hurt by a rally in the US dol­lar on surg­ing Trea­sury yields as in­vestors be­lieved Pres­i­dent-elect Donald Trump’s poli­cies would in­voke faster in­fla­tion. “Mar­kets seem to ac­cept Trump as good for busi­ness,” said Joshua Rot­bart, man­ag­ing part­ner at Hong Kong-based bul­lion ser­vices provider J Rot­bart & Co.

An ex­pected US in­ter­est rate hike by the Fed­eral Re­serve in De­cem­ber has also been pres­sur­ing gold. Gold is highly sen­si­tive to ris­ing rates, which lift the op­por­tu­nity cost of hold­ing non-yield­ing as­sets such as bul­lion, while boost­ing the dol­lar, in which it is priced. The dol­lar hit its high­est level against a bas­ket of ma­jor cur­ren­cies for al­most 14 years last week and was slightly firmer yes­ter­day as US debt yields re­sumed their as­cent. Oil surged yes­ter­day on prospects for an OPEC out­put cut to curb over­sup­ply.

“The im­pact of an OPEC deal on gold would be tricky to as­sess,” said Ed­ward Meir, an an­a­lyst with INTL FCS­tone. “A fail­ure by OPEC to agree on a cred­i­ble cut will send oil prices sharply lower and pos­si­bly drag gold down with it. How­ever, we could see the dol­lar weaken as a re­sult of oil sell­ing off and this could boost gold,” Meir said. Sil­ver rose 0.4 per­cent to $16.66 an ounce while plat­inum added 0.1 per­cent at $918.49. Pal­la­dium climbed to an in­tra­day high of $772.70 an ounce, its strong­est since June 2015, par­ing gains to $766.72, up 0.9 per­cent. Pal­la­dium has risen over 23 per­cent this month, its best since Fe­bru­ary 2008, out­per­form­ing other met­als. — Reuters

JAKARTA: In­done­sian tech­ni­cians work on the as­sem­bly line dur­ing a tour of the newly launched BMW 7-se­ries lux­ury car plant in Jakarta yes­ter­day. — AFP

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