Gold Price Closes Higher on Bargain Hunting
New York (Aug 29) Gold prices reversed losses on Monday, as investors looking for bargains stepped in to buy up the precious metal.
Gold for December delivery settled up 0.1% at $1,327.10 a troy ounce on the Comex division of the New York Mercantile Exchange, after trading as low as $1,321.20 earlier in the session.
However, the market is still skeptical of a September rate increase, which led to bargain hunting as gold prices dropped on Monday, said George Gero, managing director at RBC Wealth Management.
"It seems like while on Friday, consensus building a case [for a rate increase] is very strong ... it's not imminent," Mr. Gero said. "December seems to be the consensus at this time."
Higher rates can weigh on gold, which pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise.
"The market has not priced in a September hike and is vulnerable to further lifting of weak long positions," wrote Peter Hug, global trading director of Kitco Metals, in a Monday email. However, "we continue to believe that September remains off the table."
Speculative investors have piled into bullish gold bets this year, as the precious metal has soared on low interest rates and economic concerns.
A stronger U.S. dollar also put pressure on gold but reversed gains throughout the day. The WSJ Dollar Index rose 0.3% Monday morning but was recently trading near flat. Gold is priced in dollars and becomes more expensive to foreign investors when the U.S. currency rises.