Gold eases as risk appetite improves, US dollar strengthens

The spot gold price eased during Asian trading hours on Monday, October 31, as improved risk sentiment decreased the appetite for safe haven assets.

Spot gold was recently at $1,276.75-1,277.15 per ounce, down $7.00 from last Friday’s close. Trading ranged at $1,276.30-1,279.60 so far on Monday.

“So far gold has found strong support around $1,250, which we believe relates to a pick-up in physical demand from jewellery fabricators,” James Moore, an analyst at Metal Bulletin, said.

“But attempts to rally continue to struggle. The sell-off in the bond market also points to reduced demand for safe-haven assets while risk appetite improves and suggest gold prices will continue to struggle in the short term.”

Solid manufacturing figures from the US, Europe and Asia has boosted investor sentiments.

Last Friday, the US’ advance third-quarter GDP growth came in at 2.9%, beating forecast of 2.5% and the previous reading of 1.4%. As well, the advance GDP price index at 1.5% was better than the expected 1.3%.

Following the data, now roughly 74% of investors expect the Federal Reserve to normalise interest rates in December, according to the CME FedWatch tool. With the presidential election in less than two weeks, it is unlikely the policy-board adjusts the Federal Funds rate beforehand during the November 1-2 Fed meeting.

Focus will also be on the Chinese manufacturing PMI this Tuesday. Consensus is for Chinese factory activity to have remained in expansion mode in October, with the official manufacturing PMI expected at 50.3 and the Caixin manufacturing PMI at 50.2.

In other US data released last Friday, the US employment cost index quarter-on-quarter was in line with consensus at 0.6%, while the UoM consumer sentiment at 87.2 was below the predicted 88.2.

Other US data due later today includes the core PCE price index, personal spending, personal income and Chicago PMI.

In currencies, the US dollar index rose 0.18% to 98.49 recently.

In other commodities, the Brent crude oil spot price fell 0.52% to $50.40 per barrel, and the Texas light sweet crude oil spot price slipped 0.35% to $48.44 so far on Monday.

In equities, the Shanghai Composite fell 0.58% to 3,086.28 recently on Monday.

In other precious metals, silver was last at $17.84/17.89, up $0.12. Platinum rose $0.50 to $976/981, while palladium decreased $0.50 to $614/621 so far on Monday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 279.60 yuan per gram, and the December silver was flat at 4,080 yuan per kilogram.

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