Gold price slips as equities take investors’ fancy
Mumbai-India (Jan 29) Gold prices eased on Monday as the dollar gained some lost ground and continued gains in equities weighed on bullion.
However, the metal hovered near a 17-month high hit last week as the greenback hit a three-year low after US Treasury Secretary Steven Mnuchin backed a weaker currency.
Spot gold was down 0.1% at $1,348.10/oz, as of 5.25am GMT. US gold futures for February delivery slipped 0.4% to $1,346.50/oz.
The US dollar is trying to climb back up and that is weighing on gold currently, according to Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
"There is a lot of dollar-related buying and selling in the gold market right now."
The dollar crawled up from lows but struggled to pull ahead from six consecutive weeks of losses on its evaporating yield advantage and doubts about Washington’s commitment to a strong currency. A stronger dollar makes bullion more expensive for holders of other currencies. Earlier in the session, the dollar index against a basket of six major currencies, rose 0.2% to 89.215, extending its rebound from 88.429, a three-year nadir set on Thursday.
Meanwhile, Asian shares extended their bull run amid upbeat corporate earnings and strong global economic growth.
"However, gold’s weakness due to a stronger dollar and equity markets could be temporary," said Hareesh V, head of commodity research, Geojit Financial Services. "Gold will touch the $1,400/oz level again as long as it doesn’t break the $1,260 mark."
The metal had dropped below the $1,400/oz level in September 2013 and has not crossed above the level since.
"The recent strength in equity markets has been keeping gold prices from going higher. When equities start to come down, gold will definitely be the first gainer," Hareesh added. "So, technically, we see a rally, but it has to break the $1,400 mark first — it’s a very critical level."
Spot gold may drop to $1,335/oz, as a support at $1,347/oz may not hold, said Reuters technical analyst Wang Tao.
In other precious metals, silver remained unchanged at $17.39/oz. It rose about 2.3% last week, its biggest weekly gain for the year, so far.
Platinum gained 0.1% to $1,010.80/oz, after dipping 0.3% last week in its first weekly decline in seven. Palladium declined 0.3% to $1,088.47/oz. The metal registered its second weekly loss last week, dropping about 1.2%.
Reuters
