Gold price back under $1,200/oz as dollar strength weighs
Washington (May 26) On Friday, US Fed chair Janet Yellen said that despite mixed signs on the US economy, she expected to go through with an interest rate hike this year – with many in the market predicting a September date. Spot gold was last at $1,197.20/1,198, a $9 loss on the previous day’s close.
In currencies, the dollar was firm against the euro at 1,0918. “Unlike the Fed, other central banks are in full “easing mode” and are even contemplating expanding their stimulus (as is the case for China).
All this should be, in theory, bullish for gold, but the precious metal has to contend with the offsetting bearish variable of a stronger dollar,” said INTL FCStone analyst Edward Meir. “While we attribute the recent weakness to the strengthening of the US dollar, we are somewhat surprised that gold prices have failed to push higher given the sharp decline in US real interest rates of late – which should have, in theory, pushed gold prices higher, added FastMarkets analyst Boris Mikanikrezai. Still, the gold price did find support from increased concerns that the Greek government might default on its June IMF payment. “Over the weekend, Greek Prime Minister Alexis Tsipras said that Greece would not increase austerity measures, while the Greek interior minister said that without a deal, Greece could not and would not pay the IMF in June. The uncertainty weighed on Greek equities, which lost 3 percent,” said Credit Suisse in a note. The data agenda will be US-focused today, with core durable goods, durable goods orders, HPI, flash service PMI, CB consumer confidence, new home sales and Richmond manufacturing data all set for release. Silver at $16.85/16.89 was back under $17, while platinum at $1,138/1,143 was down $5 and palladium declined $1 to $779/784.