Gold prices inch lower as strong equities weigh

GOLD inched lower, having posted its biggest daily decline in two weeks in the previous session, as the impact of a weak dollar was offset by gains on Wall Street.

The metal had broken below the key psychological level of US$1,300 on Thursday to hit a one-week low due to sharp gains in the dollar.

“The dollar strength really hurt precious metals and we’re seeing some of that reverse with most currencies running a little higher versus the dollar,” said Chris Gaffney, president of world markets at TIAA Bank.

“We’ve got tame inflation, the trade situation is getting resolved and Brexit looks like it’s going to be pushed down the road. So right now investors don’t have any incentive to buy gold,” Gaffney added.

US stocks climbed back to near record highs on Friday after the largest US bank, JPMorgan Chase & Co, soothed worries that the first- quarter earnings season would pour cold water on Wall Street’s big rally back from last year’s slump.

Spot gold edged 0.1 per cent lower to US$1,290.71 per ounce.

US gold futures settled 0.1 per cent higher at US$1,295.2 an ounce.

Meanwhile, the dollar index was down 0.2 per cent against a basket of leading currencies and was headed for its first weekly decline in four weeks, keeping gold from falling further.

A further dovish tone from the US Federal Reserve and weaker global growth data could propel gold higher, Gaffney said, but that for now, it was going to struggle to get back above the US$1,300 level.

Early in the week, bullion received support from increased buying by central banks and a dovish view from the European Central Bank as well as minutes from the US Fed. However strong US economic data on Thursday boosted the dollar and triggered a sell-off in gold.

Data showed weekly US jobless claims fell to the lowest in nearly half a century and producer prices increased the most in five months in March.

“Given the marked decline we expect in US equities this year, we suspect that safe-haven assets will soon surge,” Capital Economics analysts said in a note.

“We think gold investment should be strong, particularly in the form of exchange-traded fund buying. As a result, we expect the price of gold to rally to US$1,400 per ounce by end-2019.”

Silver was down 0.1 per cent at US$14.94 an ounce, but was on track for its third weekly decline.

Spot platinum rose 0.1 per cent to US$888.11 per ounce, but was on track to snap four straight weeks of gains.

Palladium climbed 0.6 per cent to US$ 1,373.02 per ounce and was up 0.3 per cent for the week.