Gold loses bullish focus amid dollar,treasury surge

Gold failed to cling to the $1,900 an ounce level as the U.S. dollar and the Treasury yields climbed higher, to create a bearish pullback for the precious metal often regarded by investors as a hedge against inflation.

Front-month gold futures contract on New York’s Comex was down 0.9 per cent at $1,879.60 per ounce, losing 0.7 per cent or $12.40 for the week, while Spot gold shed $17.80 to settle at $1,876.40.

Bart Melek ,head of global strategy ,TD Securities, noted that gold’s decline following its stay at the $1,900 level is more of “a speed bump” rather than “an outright move lower.

Lukman Otunuga, FXTM senior research analyst, asserted that gold bulls are still in the driver’s seat from the technical perspective, adding that $1,855 support level for the yellow metal with $1,916 acting as the first level of interest if $1,900 proves to be weak resistance.

“Beyond $1,916, gold has the potential to test $1,927 and the year-to-date high at $1,959,” he said.

Edward Moya, OANDA senior market analyst said the gold market is currently at a rest stop but prices are expected to rebound soon.

“Everyone is eyeing $1,950. It will excite the non-gold traders to jump back in. In the end, gold will eventually lead to $1,950, and then at some point, it’ll run to $2,000,” he added.

Moya sees gold buyers emerge at the $1,870 level but warned that the next few months would be choppy for the precious metal.

On his part, Daniel Ghali, TD Securities commodity strategist said US employment and CPI data had failed to spur gold above $1,900, suggesting inflation hedging flows were slowing at the same time as physical flows were weakening.

He further averred that while a near-term pullback to $1,850 could be on the cards, gold prices in the medium term should be supported by dovish central bank policies for a prolonged period of time.