Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusiness

Gold hits four-month low as firmer dollar sparks range break

Prices had been hemmed between USD 1,265 and USD 1,300 an ounce since mid-October as a series of record highs in stock markets pulled investment interest from bullion while traders also awaited an expected increase to U.S. interest rates this month.

December 07, 2017 / 08:29 PM IST

Gold slid to its lowest in four months on Thursday as a bounce in the dollar sparked by optimism over US tax reform plans sent the metal out of its recent narrow trading range.

Prices had been hemmed between USD 1,265 and USD 1,300 an ounce since mid-October as a series of record highs in stock markets pulled investment interest from bullion while traders also awaited an expected increase to U.S. interest rates this month.

Gold broke out of that range this week, extending losses after slipping below its 200-day moving average at USD 1,267.

Spot gold was down 0.8 percent at USD 1,254.23 by 1235 GMT, off an earlier four-month low of USD 1,253.56. US gold futures for December delivery were down USD 9.80 at USD 1,256.30.

"We've had a (breakdown) of support at USD 1,260, which is a key level," said ActivTrades chief analyst Carlo Alberto de Casa. "From a technical point of view, many traders had stop-losses just below USD 1,262, and today the market is going down for this reason."

Strength in the dollar is feeding into this, he said, adding: "That the US dollar is recovering isn't very welcome for the commodities market."

The dollar touched a two-week high on Thursday on optimism that the United States would push through tax reforms, while global equities rebounded after two straight days of losses.

US Senate Republicans agreed on Wednesday to talks with the House of Representatives on sweeping tax legislation, raising hopes that lawmakers could agree on a final bill ahead of a December 22 deadline.

Gold is now awaiting further direction from U.S. non-farm payrolls data this week, a key barometer of the US economy. Next week the Federal Reserve is also expected to announce another rise in U.S. interest rates and to offer guidance on the pace of further increases.

Rising US interest rates increase the opportunity cost of holding non-yielding gold while boosting the dollar, in which it is priced.

"Both the fundamentals and the technicals in gold look somewhat bearish at the moment and we suspect that we could move slightly lower heading into next week's critical Federal Reserve meeting," said INTL FCStone analyst Ed Meir.

Among other precious metals, silver was down 1 percent at USD 15.81 an ounce after slipping to its lowest since mid-July at USD 15.78.

Platinum dipped by 0.8 percent to USD 894.50 after touching its lowest since July 11 at USD 893. The metal has fallen nearly 5 percent this week and is on track for its biggest weekly loss in nine months.

Palladium firmed by 0.3 percent to USD 996.50.

Reuters
Tags: #Business
first published: Dec 7, 2017 08:26 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347