Gold price gains as strong dollar cools its advance

London (Oct 27)  Gold futures found some traction on Thursday as the dollar slipped from the multimonth highs it hit earlier this week.

Gold has chopped in a narrow trading band, penned in by overall relative strength in the U.S. dollar and prospects for higher U.S. interest rates, which tend to work against nonyielding gold. But gold has been underpinned by U.S. election nerves.

Gold “remains close to the 200-day moving average. Robust physical demand is countered by continuing selling from the gold ETFs,” said commodities analysts at Commerzbank, led by Carsten Fritsch, in a note. “The strong gold demand in India is no doubt responsible for the gold price not coming under pressure ... despite a second substantial day of outflows from the SPDR Gold Trust, the world’s largest gold ETF.”

Early Thursday, December gold GCZ6, +0.24%  gained $3.40, or 0.3%, to $1,270.10, taking a shot at Tuesday’s finish at $1,273.60, the contract’s highest settlement since Oct. 3, according to FactSet data. Prices are down about 3.5% so far this month.

December silver SIZ6, +0.25%  rose 4 cents, or 0.3%, to $17.67 an ounce.

The ICE U.S. Dollar Index DXY, -0.04%   fell 0.1% after trading this week at its highest levels since January. It’s up more than 3% month to date. The dollar and gold often move inversely because a firmer buck leaves dollar-priced commodities less desirable to purchasers using another currency.

U.S. stocks were headed for a lower open following a mixed bag of earnings news.

Prospects for higher U.S. interest rates from the Federal Reserve — next month, or more likely, in December, based on futures pricing — will face a new test in Thursday morning’s durable goods orders release at 8:30 a.m. Eastern. Weekly jobless claims and pending home sales data are also due for release.

In related exchange-traded fund trading, the SPDR Gold Trust GLD, -0.56%   fell 0.2% and the VanEck Vectors Gold Miners ETF GDX, -2.11%  shed 0.6%.

Source: MarketWatch