BackGold prices dip on profit-taking amid Fed inflation concerns
Gold prices edge lower, with investors taking profits after gains of nearly 1% in the previous session on weaker US economic data and concerns among some Fed policymakers over lower inflation
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Gold prices nudged lower on Thursday, with investors taking profits after gains of nearly 1% in the previous session on weaker US economic data and concerns among some Federal Reserve policymakers over lower inflation.
Many Fed policymakers expect that interest rates will have to be raised in the “near term", the minutes of the US central bank’s last policy meeting showed on Wednesday. However, some members expressed concern over the inflation outlook and emphasized they would be looking at upcoming economic data before deciding the timing of future rate rises.
Spot gold was down 0.2% at $1,290.05 per ounce by 9.35am. US gold futures for December delivery edged down 0.2% to $1,289.80.
“There appears to be a bit of profit taking ... With the impending rate hike from the Fed next month, maybe (investors think) gold prices have gone a bit too high and will come down in the aftermath of the rate hike," said John Sharma, an economist with National Australia Bank. “The Fed has some inflation concerns and we don’t know how it’s going to be in the medium term. There is lot of uncertainty everywhere and you can see it in gold’s (rangebound) movement."
Earlier in the week, Fed chair Janet Yellen stuck by her prediction that US inflation will soon rebound but offered an unusually strong caveat: she is “very uncertain" about this and is open to the possibility that prices could remain low for years to come.
“Although the minutes seemed to tick a December hike as a done deal, traders took fright at their more ‘data-driven’ neutral stance into 2018," said Jeffrey Halley, a senior market analyst with OANDA. “Gold was one of the chief beneficiaries of the ensuing general dollar sell-off (on Wednesday) as the US heads into its Thanksgiving break ... We would expect trading over the coming two days to be muted with the US away."
US markets are closed on Thursday for the Thanksgiving holiday, while Japan also has a public holiday.
Spot gold may test a support at $1,283 per ounce as it failed to break resistance at $1,297, according to Reuters technical analyst Wang Tao.
In other markets, the dollar touched a two-month low against the yen and hit a one-month trough against a basket of six major currencies.
Meanwhile, silver was down 0.4% at $17.08 an ounce, platinum fell 0.9% to $929.95 an ounce, while palladium was up 0.1% at $1,004.10 an ounce. Reuters
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