Gold price hits over two-week low; set to end six-month losing streak

London (Oct 31)  Gold prices fell to a more than two-week low on Wednesday as Asian stocks gained and the dollar touched multi-month highs on upbeat U.S. economic data.

The yellow metal, however, remained on track to end a six-month losing streak, the longest since a period that finished in early 1997.

Spot gold was 0.4 percent lower at $1,217.26 an ounce at 0419 GMT, having touched its lowest since Oct. 12 at $1,215.35 earlier in the session. It has risen about 2.4 percent so far in October, the biggest monthly gain since January.

U.S. gold futures fell 0.5 percent to $1,219.3 an ounce.

A stronger dollar and a recovery in equities are putting pressure on gold today, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

“The market would now be focusing on the upcoming U.S. non-farm payroll data due on Friday and the U.S. mid-term elections next week for a direction,” Leung added.

The midterm elections, on Nov. 6, will determine whether the Republican or Democratic party controls the U.S. Congress.

In the wider markets, Asian stocks pulled away from 20-month lows on Wednesday, thanks to a rebound on Wall Street, although investors remained cautious.

The dollar hovered near 16-month highs versus a basket of major rivals after gaining overnight as traders bet on the relative outperformance of the U.S. economy and continued rate increases by the Federal Reserve.

“If the dollar continues to march higher, especially against its emerging markets peers, this will put some pressure on gold,” said Hussein Sayed, Chief Market Strategist at FXTM.

“As long as inflation doesn’t become a real threat or equities plunge much further from current levels, many investors will prefer yielding instruments than investing in gold, and that’s what the dollar is providing.”

Gold prices have slipped about 11 percent from their April peak as investors turned to the dollar as a safe-haven as the trade war unfolded against a backdrop of higher U.S. interest rates.

A stronger dollar makes dollar-denominated bullion more expensive for users f other currencies while higher interest rates reduce the attraction of non-yielding gold.

Spot gold may break a support at $1,217 per ounce and fall to the next support at $1,208, as suggested by a retracement analysis, said Reuters technical analyst Wang Tao.

Among other precious metals silver was down 0.4 percent at $14.40 per ounce after touching more than two-week low of $14.31.

Platinum rose 0.1 percent to $833.10 per ounce, while palladium climbed 0.4 percent to $1,076.99 per ounce.

MarketWire

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