Gold price falls as Donald Trump’s tax promise lifts dollar
London (Feb 10) Gold fell on Friday, retreating further from this week’s three-month high, as US President Donald Trump’s promise of a major tax announcement boosted the dollar and upbeat data fuelled talk of a near-term rise in US interest rates.
Disappointment among some buyers at gold’s failure to break above the $1,245/oz level it tested twice this week had also fed into the pull-back, analysts said.
Spot gold was down 0.5% at $1,225.01/oz at 1028 GMT, while US gold futures for April delivery dropped $10.30 to $1,226.50. On Wednesday spot gold reached its highest since mid-November at $1,244.67. The dollar reached a 10-day high against a basket of currencies on Friday and was on course for its best week since mid-December as Trump’s pledge to announce a major tax plan within weeks cooled some market nerves, reinvigorating dollar bulls.
"Obviously the dollar has recovered a bit of strength in the past day or so, which has weighed on precious metals," Mitsubishi analyst Jonathan Butler said.
"The move above $1,220 was pretty convincing, but we didn’t get to the next level at $1,249-$1,250, which would have been confirmation of that bullish trend going back to the start of the year. What we’ve seen is possibly some disappointed investors turning tail and booking some profit."
US economic data also stoked talk that the Federal Reserve would press ahead with US interest rate hikes sooner rather than later. Initial jobless claims dropped unexpectedly last week to the lowest in almost 43 years. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding nonyielding bullion while boosting the dollar, in which it is priced.
Major physical markets in Asia were mixed this week as Indian jewellers stocked up for wedding season while rising prices sidelined buyers elsewhere. Premiums over the spot price in India rose to $3/oz this week from about $2 the previous week, indicating upbeat demand. In Hong Kong and Singapore they edged down to between 80c and $1.20 from about $1-$1.40 last week.
Silver was down 0.3% at $17.59/oz, while palladium gained 0.5% to $775.90. Platinum lost 0.8% to $1,004.10, having touched its highest since October 3 on Thursday at $1,028.50.
A Commerzbank note on technicals said that the bank was alert to profit-taking after platinum’s retest of its $1,025 November high.
"A close above $1,025.51 would target $1,070, the September 22 high, and the 61.8% retracement at $1,080," it said.
Source: Reuters
