Gold price struggles to regain footing despite renewed global growth worries

January 22, 2019

London (Jan 22)  for February delivery on Comex GCG9, +0.02%  was off 30 cents, or less than 0.1%, at $1,282.30 an ounce, while March silver SIH9, -0.55%  gave up 11.9 cents, or 0.8%, to trade at $15.28 an ounce.

Gold ended 2018 on a strong note, rallying as U.S. equities tumbled and the U.S. dollar softened. Since the beginning of the year, however, stocks have bounced back sharply, robbing the yellow metal of haven-related demand, said Carsten Menke, commodities analyst at Julius Baer, in a note.

A rebounding U.S. dollar and rising bond yields have also kept a lid on the yellow metal, he said. A stronger dollar can be a negative for commodities priced in the currency, making them more expensive to users of other currencies. Higher bond yields can dull the attraction of commodities, which don’t offer a yield.

While stocks appeared due to begin Tuesday on a down note following a warning from the International Monetary Fund on global growth and downbeat China data, overall fears of an economic slowdown seem to have faded since year-end, Menke said.

Longer term, Menke said investment demand has remained strong, with holdings of physically backed products continuing to grow, putting prices on a solid footing.





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