Gold prices reverse on profit-taking
New York (Feb 10) Gold prices were lower on the London spot market Wednesday, as traders took profit following a recent price rally that saw the metal touch a key trading level.
Spot gold was down 0.4 per cent at $US1,184.22 a troy ounce in mid-morning European trade, a two-day low, having reached $US1,200 an ounce in Monday's session.
To the surprise of many in the market, gold has gained more than any other major precious metal since the start of the year at 11.5 per cent, with prices buoyed by safe-haven demand, a weaker dollar and improving investor sentiment.
But prices could tumble as the metal is seen over bought.
"I see a slightly negative slant to this for gold, with the market long up here, the risks are to the downside," said David Govett, head of precious metals trading at Marex Spectron, in a client note.
Market participants will be watching out for the testimony of Federal Reserve Chairwoman Janet Yellen to the banking committee of the US House Financial Services Committee at 1500 GMT. Any perceived dovishness about the timing of the next interest rate increase could direct the dollar lower and support gold, while a more hawkish note would likely firm the greenback and weigh on the metal.
However, some market players have low expectations for signs of life from the Fed.
"We do not expect this to yield anything new about the US Federal Reserve's monetary policy," said Commerzbank AG in a note.
Among the other precious metals, spot silver was down 0.4 per cent at $US15.157 an ounce, spot platinum was down 1 per cent at $US922.20 an ounce and spot palladium was down 0.7 per cent at $US509.80 an ounce.