Gold consolidates, weaker dollar supports precious metals prices

Gold was consolidating on the morning of Wednesday, October 19 in London, supported by a weaker dollar and a slightly lower probability of the US Federal Reserve lifting rates this year.

The spot gold price was recently quoted at $1,263.00/1,263.40 per oz, up 70 cents on Monday’s close. Trade has ranged from $1,260.20 to $1,264.65 so far.

“The precious metals remain in consolidation mode. Gold prices are trying to get some lift but we wait to see if there is follow-through buying,” Metal Bulletin analyst William Adams said.

“The lower prices are attracting investment buying, ETF holdings are at highs for the year and we would expect the lower prices of late to prompt some physical restocking,” he added.

After hitting a seven-month high of 98.17 on Monday, the US dollar index has softened – it was recently at 97.69 – due to weak US economic data that has prompted speculation the Fed will need to maintain accommodative policy.

The data follows comments from Fed chair Janet Yellen highlighting the potential benefits of temporarily running a “high-pressure economy” to stimulate business investment and jobs growth, James Moore, a research analyst at Metal Bulletin, said.

This suggests the Fed will maintain a loose policy stance even if inflation exceeds its 2% target, he noted.

In the other metals, spot silver was unchanged at $17.635/17.655 per oz as was platinum at $937/947. Palladium at $638/645 per oz was up $4.50.

(Editing by Mark Shaw)

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