Gold Price Slips From Its Post-Fed High as Investors Reap Gains
New York (Sept 23) Gold prices edged lower Friday, as profit-taking and a strong dollar pulled prices down from a two-week high the previous day.
Gold for December delivery settled down 0.2% at $1,341.70 a troy ounce on the Comex division of the New York Mercantile Exchange, breaking a four-day winning streak.
“We attribute the price slide to profit-taking by short-term-oriented speculative financial investors, given that gold has surged by nearly $40 in the space of just two days,” Commerzbank said in a research note.
Gold rallied following the Federal Reserve’s decision on Wednesday not to raise interest rates, which is typically bullish for the precious metal. Because it doesn’t bear interest, gold is usually more competitive when rates stay low.
Prices also suffered from strength in the U.S. dollar. The WSJ Dollar Index, which measures the dollar against a basket of other currencies, was up 0.3% on Friday.
A stronger dollar puts pressure on dollar-denominated commodities like gold by making them more expensive for investors who hold other currencies.
While investors will continue to hunt for clues on the timing of a potential rate increase later this year, a slight pickup in physical demand for the metal in China and India could also provide some support, said Joni Teves, a strategist at UBS.
“Although buying for the remainder of the year is likely to remain subdued and weaker than in previous years, relative to the first half of 2016, the improvement in appetite will be noticeable,” Ms. Teves said.
Physical gold is usually purchased for festivals and weddings in India, and a good monsoon there typically helps rural incomes, where most of the demand is based.