Gold price edges higher as the dollar pauses for breath

London (May 10)  Gold edged higher on Thursday as the dollar paused for breath, holding near its 2018 peak, with investors focused on US inflation data due later and simmering tensions between the US and Iran.

The dollar slipped slightly from a four-and-a-half-month peak, hit as long-term US treasury yields held near the psychologically important 3% level. A strong dollar makes dollar-priced gold costlier for non-US investors.

On Tuesday, US President Donald Trump withdrew the US from an international nuclear accord with Iran, raising the risk of conflict in the Middle East and increasing the appeal of safe-haven assets such as gold.

"We’ve seen a turnaround in [the dollar] in the past few weeks but, actually, gold hasn’t gone down as far as you might think, so political tensions are helping," said Macquarie commodities strategist Matthew Turner.

He added, however, that the dollar was the main driver for gold and expects the precious metal to come under pressure in the near term, with the dollar extending its rally.

Spot gold rose by 0.2% to $1,315.28 an ounce by 9.59am GMT. US gold futures for June delivery were also up 0.2% at $1,315.50.

US consumer prices data due at 12.30pm GMT with the figures expected to show annual core consumer price index (CPI) inflation rose to its highest in more than a year in April, strengthening the case for the US Federal Reserve to raise interest rates.

After reduced growth data in the eurozone and Britain in recent weeks, the Fed remains the only major central bank that appears to be on course for rate increases.

Elsewhere, North American gold-backed exchange-traded funds (ETF) registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the US and China, Syria tensions, and worries about possible US sanctions on Russia.

After Trump’s announcement on the US withdrawal from the Iran nuclear deal, Israel said on Thursday that it had attacked nearly all Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

Spot gold looks neutral in a range of $1,302 to $1,317 an ounce, said Reuters technical analyst Wang Tao.

In other precious metals, silver gained 0.6% to $16.59 an ounce after hitting a two-week high at $16.62 in the previous session. Platinum rose 0.9% to $918.20 while palladium edged up by 0.1% to $975.72.

Reuters

Silver Phoenix Twitter                 Silver Phoenix on Facebook