Gold pulls back from 5-week high as dol­lar edges higher

The Financial Daily - - NATIONAL -

BEN­GALURU: Gold prices dipped on Wed­nes­day, re­treat­ing from a more than five­week top hit in the pre­vi­ous ses­sion, as the dol­lar crawled higher.

Spot gold was down 0.2 per­cent at $1,235.31 per ounce at 0648 GMT, af­ter hit­ting its high­est since Oct. 26 at $1,241.86 an ounce in the pre­vi­ous ses­sion. U. S. gold fu­tures were down 0.5 per­cent at $1,240.7 per ounce.

"Gold is mainly track­ing the U.S. dol­lar," said Brian Lan, man­ag­ing di­rec­tor at dealer GoldSil­ver Cen­tral in Sin­ga­pore. "To­day's move in gold prices is a cor­rec­tion be­cause yes­ter­day prices were up quite a bit."

The dol­lar in­dex, which mea­sures the green­back against a bas­ket of six ma­jor cur­ren­cies, edged up about 0.2 per­cent, even though the U.S. cur­rency was un­der pres­sure as de­clin­ing Trea­sury yields raised con­cerns over eco­nomic growth.

The bench­mark 10-year Trea­sury yield fell to its low­est point since midSeptem­ber. The spread be­tween the 10- year yield over its two-year coun­ter­part also shrank to the small­est since the start of the fi­nan­cial cri­sis in Jan­uary 2008, sig­nalling to some in­vestors an ap­proach­ing eco­nomic slow­down.

"Gold prices should have taken sup­port from this but it has not. As in­fla­tion has come down, crude oil prices have come down, th­ese pos­i­tive and neg­a­tive fac­tors are hold­ing gold at the same level," said Ren­isha Chainani, head of com­mod­ity and cur­rency re­search at Monarch Net­worth Cap­i­tal.

Con­cerns about weaker growth have stoked bets that the Fed­eral Re­serve will end its cam­paign to raise in­ter­est rates sooner than pre­vi­ously thought, an­a­lysts said.

U.S. Fed­eral Re­serve Chair­man Jerome Pow­ell said last Wed­nes­day that U.S. in­ter­est rates were near­ing neu­tral lev­els, which mar­kets in­ter­preted as sig­nalling a slow­down in rate hikes.

Asian eq­ui­ties dipped in line with Wall Street as resur­gent trade con­cerns stoked wor­ries about global eco­nomic growth.

U.S. Pres­i­dent Don­ald Trump on Tues­day held out the pos­si­bil­ity of an ex­ten­sion of the 90-day trade truce with China, but warned he would re­vert to tar­iffs if the two sides could not re­solve their dif­fer­ences.

"Nor­mally you would ex­pect a bet­ter out­ing from gold given the ab­so­lute beat­down in stocks, but this is a baby step for the pre­cious metal," said Amit Ku­mar Gupta, port­fo­lio man­age­ment ser­vices head at Adroit Fi­nan­cial Ser­vices in New Delhi.

"Gold at this point will cor­rect a lit­tle more. $1,242.5 is the level gold has to test be­fore it goes up to the next level. The down­side we are look­ing at is $1,230," GoldSil­ver Cen­tral's Lan said.

Mean­while, pal­la­dium re­treated 0.3 per­cent to $ 1,229.92 per ounce, trad­ing in close prox­im­ity to the yel­low metal and af­ter notch­ing a record high on Tues­day.

Spot silver fell 0.4 per­cent to $14.46 per ounce, while plat­inum was down 1 per­cent at $795.40 per ounce af­ter hit­ting its low­est level since Sept. 17 at $787.5 ear­lier in the ses­sion.

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