Gold price pauses at 6-week highs as dollar steadies
New York (Jan 10) Gold futures narrowly pulled back on Tuesday, tracking dollar gains, after the yellow metal settled at its highest level in almost six weeks a day earlier.
Gold remained underpinned by uncertainty for interest-rate gains and the so far light details on spending plans from the incoming Donald Trump administration. Wednesday will mark President-elect Trump’s first official news conference since July, an appearance that has injected added volatility into dollar and metals trading and left stocks churning.
Gold for February delivery GCG7, -0.30% was recently down 30 cents, or less than 0.1%, at $1,186 an ounce. It traded in the green earlier, touching $1,189. The contract settled at $1,184.90 Monday, its highest settlement since Nov. 29, according to FactSet data. And at Friday’s close, gold had logged back-to-back weekly gains.
The weakness [in recent days] in the dollar is the major factor here, as traders are wary ahead of a media briefing by U.S. president–elect Donald Trump [Wednesday]. He has labeled a few countries as currency manipulators and investors are going to get a flavor for how he is going to tackle that,” said Naeem Aslam, chief market analyst with ThinkMarkets.
The dollar had been rising, and gold suffering, on hopes that the new administration’s fiscal stimulus will boost the economy, but some analysts believe that bet may have been pushed as far as it will go for now.
Early Tuesday, the ICE U.S. Dollar Index DXY, +0.22% , a measure of the dollar against six rival currencies, rebounded slightly from Monday’s drop, last changing hands up 0.1% at 101.99.
A stronger buck makes assets priced in the currency, including most gold on the global markets, more expensive to buyers using other monetary units. Gold and the dollar typically move inversely.
“Anxiety is creeping back, investors want to play safe and the yellow metal provides them this safety,” Aslam said. “However, it is important to keep in mind that the U.S. economy has a solid foundation and inflation is ticking higher. This is making things more difficult for the Fed and they will have to continue on their path of interest-rate hikes.”
On Monday, Boston Fed President Eric Rosengren said in a speech that economic conditions are likely to warrant “a still gradual but somewhat more regular” increase in the federal-funds rate. Atlanta Fed President Dennis Lockhart, meanwhile, said that the economy “appears solid” but is likely to grow at a moderate pace.
Higher rates are dollar-bullish and also tend to cut demand for nonyielding precious metals.
For spot gold, Aslam flagged near-term support at $1,176 and resistance at $1,200.
Meanwhile, silver for March delivery SIH7, -0.35% fell 2 cents, or 0.1%, to $16.66 an ounce after it logged a roughly 3.3% advance last week.
Exchange-traded funds gained in early action despite wavering in the metals futures markets.The SPDR Gold Trust GLD, +0.82% was up 0.2% premarket, while the iShares Silver Trust SLV, +0.38% rose 0.3%. The VanEck Vectors Gold Miners ETF GDX, +0.31% added 1%.
Source: MarketWatch
