Gold steady as investors weigh risks
bengaluru — Gold held steady on Wednesday as investors weighed the increasing risk of a US interest rate increase next month against the simmering geopolitical tensions that have been supporting bullion.
The dollar recouped its losses in the previous session, rising strongly against sterling after a projection by polling company YouGov showed British Prime Minister Theresa May could lose an overall majority in parliament in a June 8 election.
The projection raised the prospect of political deadlock just as formal Brexit talks begin.
Also helping the dollar, US consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to improving domestic demand that should allow the Fed to raise interest rates next month.
“The market has been overenthusiastic in terms of the weakness [seen]. Once the rate hike happens, people will focus on political uncertainty and on the physical support [for gold],” said Hamza Khan, head of commodities strategy at ING. “Fundamentally we favour the upside. We see prices at $1,350 [an ounce] for the third quarter, and $1,250 for the second quarter.”
Spot gold edged up 0.1 per cent to $1,263.91 per ounce at 1124GMT after slipping earlier in the day. It closed 0.3 per cent lower on Tuesday after rising to a one-month high of $1,270.47. For the month, bullion is down 0.4 per cent.
US gold futures were up 0.1 per cent at $1,263.30.
Spot gold may break a support at $1,257 per ounce and fall to the next support at $1,245, according to Reuters technical analyst Wang Tao.