Gold re­cov­ers lost ground as green­back stead­ies, eq­ui­ties re­treat

Business World - - WORLD MARKETS -

NEW YORK/LON­DON — Gold re­couped some of the pre­vi­ous ses­sion’s hefty losses on Mon­day as the US dol­lar stead­ied and uncer­tainty over a US tax re­form plan stoked risk aver­sion, pulling eq­ui­ties from re­cent record highs.

Prices re­mained stuck in a nar­row range, how­ever, as in­vestors awaited more clues on the path of US in­ter­est rates.

Spot gold was up 0.20% at $ 1,279 an ounce by 1: 41 p. m. EST (1841 GMT), while US gold fu­tures for De­cem­ber de­liv­ery set­tled up $ 4.70, or 0.40%, at $1,278.90 per ounce.

The metal has re­mained broadly within $15 an ounce of its 100-day mov­ing av­er­age, cur­rently at $1,277 an ounce, for most of the last month.

Gold fell 0.70% on Fri­day in its big­gest one- day drop since Oct. 26, weighed down by a rise in US Trea­sury bond yields. Yields rose, steep­en­ing the yield curve, as traders closed out some curve-flat­tener po­si­tions.

While the in­crease in yields sup­ported the dol­lar early on Mon­day, it later pared gains. Stock mar­kets also took a step down as uncer­tainty over a US tax re­form deal pushed them fur­ther away from re­cent record highs.

“The down­side risk may be out­weigh­ing up­side risk, par­tic­u­larly if the US leg­is­la­tors can­not de­liver the of­ten talked about and promised tax cuts,” said Bart Melek, head of com­mod­ity strat­egy at TD Se­cu­ri­ties in Toronto.


Gold has been sup­ported this year by geopo­lit­i­cal risks such as the North Korea’s nu­clear am­bi­tions, but a range of head­winds, from dol­lar strength to ex­pec­ta­tions for ris­ing US rates, have kept it pinned in a range.

“There is a bit of safe- haven de­mand still sup­port­ing prices, but no new additional de­mand com­ing in, which means that prices aren’t re­ally mov­ing,” Cap­i­tal Eco­nom­ics an­a­lyst Si­mona Gam­barini said.

“I think some move­ment will come closer to the next Fed­eral Re­serve meet­ing in De­cem­ber,” she added. “Most mar­kets ex­pect a rate hike… that could be what prompts prices higher or lower, de­pend­ing on what hap­pens.”

Gold is highly sen­si­tive to ris­ing US in­ter­est rates, as these in­crease the op­por­tu­nity cost of hold­ing non-yield­ing bul­lion, while boost­ing the dol­lar, in which it is priced.

Among other pre­cious met­als, sil­ver was up 0.90% at $17.05 an ounce. Plat­inum was up 0.80% at $933.40 an ounce and pal­la­dium was down 0.40% at $ 990.40 an ounce. —

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