London: Gold slipped on Thursday after the euro lost ground against the dollar and as investors awaited the outcome of Britain’s national election and testimony from former FBI director James Comey.
The euro declined after the European Central Bank cut its forecasts for inflation and said that policymakers had not discussed scaling back its massive bond-buying programme. A weaker euro versus the dollar erodes the buying power of Eurozone investors for gold, which is priced in the US currency. Spot gold was down 0.9% at $1,275.06 an ounce at 1355 GMT. US gold futures for August delivery shed 1.2% to $1,277.40.
Investors were awaiting British election results and Comey’s testimony, which will turn the spotlight on a clash between him and US President Donald Trump. Those and other uncertainties are providing support to gold, which is likely to resume its rally eventually, even if its correction lower extends in the short term, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “It’s quite natural that we see markets taper off some of the recent gains," he said. “The sentiment on the market at the moment is that gold is a ‘buy on dips’. The question is whether we’ll see a dip of any size once there’s more clarity following today’s events."
Hansen advised buying if gold declined to key short-term support at $1,265. UBS strategist Joni Teves agreed that a growing list of global uncertainties along with macro forces are expected to push gold higher, so any dips would be an opportunity to build or add to positions. “We think that investor allocations to gold remain small compared with other assets. An extension of gold’s gains up ahead raises the risk that many would have to play catch-up," she said. In other precious metals, palladium climbed 1.9% to $849.75 an ounce. In the previous session, it hit its highest in nearly three years but shed its early gains to end 2.3% lower.
Commerzbank technical analyst Karen Jones advised bullish investors to be wary of the palladium market. “It will shortly encounter the 16-year resistance line at $867/68 and, with a 13 count on the daily chart, we would tighten up stops (on long positions) considerably," she said. Platinum fell 0.9% to $933.24 while silver lost 1% to $17.37. Reuters