Gold price eases a touch from 2-month high as dollar steadies
London (Jan 18) Gold prices pulled back only slightly early Wednesday from a finish on Tuesday at their highest level since mid-November as dollar sellers came up for air.
Gold for February delivery GCG7, -0.02% eased 60 cents, or 0.1%, to $1,212.30. The contract settled the previous session at $1,212.90 an ounce after trading as high as $1,218.90.
Silver for March delivery SIH7, -0.02% fell less than a cent, or 0.1%, to $17.14 an ounce.
The ICE U.S. Dollar Index DXY, +0.45% , which was hammered a day earlier following comments from President-elect Donald Trump, was trading up 0.4% Wednesday. Gold and the dollar typically move inversely since a richer greenback cuts demand for the dollar-priced metal from buyers using other currencies.
In an interview with The Wall Street Journal on Friday, Trump said the dollar, which touched a more than 14-year high about two weeks ago, has gotten “too strong,” as China keeps its own yuan weaker. He said the dollar’s strength is impeding the competitiveness of U.S. companies.
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“The newswires were quick to attribute the move to comments from [Trump], who said the greenback is ‘too strong’ ... In fact, it started some time earlier and seems to mark the return of ‘Trump trade’ unwinding as the dominant market theme after it had been briefly overshadowed by ‘hard Brexit’ fears at the start of the week,” said Ilya Spivak, currency strategist with Daily FX. On Tuesday, British Prime Minister Theresa May said the U.K. would move ahead to vote on a clean cut with the European Union but hoped to negotiate trade deals.
Economic data and Federal Reserve chatter could keep financial markets busy ahead of the U.S. presidential inauguration on Friday.
On tap today: readings on consumer prices at 8:30 a.m. Eastern Time, and on industrial production and capacity utilization at 9:15 a.m. Eastern, all for December. The National Association of Homebuilders’s housing market index for January follows at 10 a.m. Eastern, while the Fed’s Beige Book is due at 2 p.m. Eastern.
The consumer prices report should be closely watched. Economists polled by MarketWatch are forecasting a monthly rise of 0.2% for core inflation and 0.3% for headline inflation.
“A similar upside surprise this time around may echo December’s strong wage growth data, rekindling Fed rate-hike speculation and weighing on gold,” said Spivak. Nonyielding gold tends to fall out of favor in a rising-rate climate.
Investors will also be watching a speech from Fed Chairwoman Yellen on the goals of monetary policy, due at 3 p.m. Eastern Time. Ahead of that, Minneapolis Fed President Neel Kashkari will make an economic-themed speech at 11 a.m. Eastern.
In ETF trading, the SPDR Gold Trust GLD, -0.34% rose 1.4% premarket, the iShares Silver Trust SLV, +2.13% added 2% and the VanEck Vectors Gold Miners ETF GDX, -0.30% gained 2.7%.
Source: MarketWatch
