Global gold prices edge away from seven-week high as dollar steadies
Bengaluru: Gold prices edged lower on Wednesday as the dollar firmed and as investors took profits after downbeat US data propelled prices to a seven-week high in the previous session.
“At the moment, the upside looks a little bit limited. We’re seeing obviously some increase ... in net long-positioning in the market, but we’re seeing some selling come through on the ETF side as well,” said ANZ analyst Daniel Hynes, referring to exchange traded funds.
“So it’s going to be difficult for gold to break out of (its) range for the next week or two.”
Spot gold had fallen 0.2% to $1,265.80 per ounce at 12.08pm. The day before, it hit its highest since 14 June at $1,273.97.
US gold futures for December delivery declined 0.6% to $1,272.30 per ounce.
A gauge of U.S. factory activity slid from a near three-year high in July amid a slowdown in new orders, and consumer spending barely rose in the prior month, setting the stage for a moderate economic expansion in the third quarter.
“I think investors are probably looking for some further evidence of stronger inflation numbers before they get a little bit more optimistic about a rate hike, which would clearly be a headwind for gold prices if the probability of that starts to rise,” Hynes said.
The largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust,, saw holdings decrease by over 7% in the month of July, the biggest monthly outflow since April 2013.
The fund has seen outflows of over 24 tonnes since 21 July.
The dollar clung to modest gains on Wednesday after bouncing from 15-month lows, benefiting from a pause in selling of the battered currency as investors begin positioning for key events this week, notably Friday’s US employment report.
For potential impact on the dollar, the market was also waiting for the US ADP jobs report and comments by San Francisco Fed President John Williams and Cleveland Fed chief Loretta Mester later in the session.
Spot gold may break support at $1,264 per ounce and fall to the next support level at $1,258, as suggested by its wave pattern and a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.
Meanwhile, silver slipped 0.6% to $16.60 per ounce. It touched its highest since 29 June earlier in the session.
Platinum edged down 0.1% to $942.90 per ounce, after rising to its highest in seven weeks earlier in the day. Palladium drifted 0.3% lower to $889.60 per ounce.
In the previous session, the prices marked their highest since 13 June. Reuters