US Dollar Profit-Taking Gives Gold Some Breathing Room

13 May, 2018, 12:02 | Author: Terri Saunders
  • WTI Crude Oil

The U.S. dollar index, a gauge of the dollar against a basket of other major currencies, rose 0.28 percent to 92.855 as of 1639 GMT.

Gold prices nudged lower on Thursday as the dollar held near its 2018-peak on firm US bond yields, with investors also keeping an eye out for any further impact from US President Donald Trump's decision to pull out of a nuclear deal with Iran. Futures saw a roughly 0.5% rise for the week, which marked the first weekly climb in about a month. The contract settled Thursday at $1,322.30 an ounce-marking the highest finish for a most-active contract since April 27.

Turner added, however, that the dollar was the main driver for gold and he expects the precious metal to come under pressure in the near term, with the dollar extending its rally.

Fed funds futures, however, rose on Thursday, indicating some traders continued to expect the United States central bank to raise key interest rates at its next policy meeting in June.

Gold prices are now weakening.

"Gold is still stuck mirroring moves in the dollar", said Adrian Ash, head of research at BullionVault.

The U.S. stock market posted losses on Tuesday, curbing the fall of gold.

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The buck had been driven up recently amid an expected widening gap between higher USA interest rates and comparative rates for the other economic powerhouses.

Gold is traditionally seen as a safe place to park assets in times of uncertainty or conflict.

For now, Ilya Spivak, commodities and currency analyst with Daily FX, said "gold prices are attempting to carve out a bottom after testing rising trend support set from December 2016".

Spot gold was steady at Dollars 1,321.93 per ounce at 0100 GMT, after rising to the highest since end-April at USD 1,322.76 in the previous session.

In other precious metals, silver gained 0.6% to US$16.59 an ounce after hitting a two-week high at US$16.62 in the previous session.

Elsewhere, North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russian Federation.

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