Gold inches lower as US dollar climbs higher

The spot gold price inched lower during Asian trading hours on Friday, October 21, as the US dollar continued to gain strength.

Spot gold was recently at $1,262.65-1,263.95 per ounce, down $3.30 from Thursday’s close. Trading ranged at $1,262.05-1,266.43 so far on Friday.

The US dollar index climbed to a fresh seven-month high of 98.56 on Friday – it was recently at 98.50, up 0.2% from Thursday’s close.

The US dollar had gained strength after the European Central Bank (ECB) decided on Thursday to keep rates unchanged.

The ECB maintained its asset-purchase programme at 80 billion euros per month. In his press conference, ECB president Mario Draghi said the bank has not discussed tapering and did not provide a timetable for any potential changes.

“The bias remains towards further easing; there will likely be an extension of quantitative easing beyond March 2017 – it’s hard to see an abrupt ending to the program,” ANZ Research said on Friday.

In US data released Thursday, unemployment claims for October 6-13 came in at 260,000, above the forecast of 251,000 but below the psychologically important 300,000 mark.

“Although a sizable uptick in claims, it is coming off very low claims over the past couple weeks. The outcome is still low and suggests continued improvement in labour market dynamics,” ANZ commented on the data.

The Philly Fed manufacturing index in October at 9.7 beat the estimate of 5.2, existing home sales were better than forecast at 5.47 million of units and the CB leading index was as expected at 0.2 percent. 

“The spot gold price could weaken further as the US dollar rises due to stable US economic data and the ECB’s policy,” China’s Zhengjin Precious Metals said on Friday. The broker sees support for spot gold at $1,230 and resistance at $1,280.

It is a quiet data for economic data with mainly the Belgian NBB business climate and EU consumer confidence due later today

In other commodities, crude oil prices also came under pressure after Russia’s largest oil company said that the country could increase oil production significantly.

The Brent crude oil spot price fell 0.45% to $51.14 per barrel and the Texas light sweet crude slipped 0.51% $50.36 so far on Friday.

In equities, the Shanghai Composite rose 0.38% to 3,096.25 so far today.

In other precious metals, silver was last at $17.42/17.42, down $0.09. Platinum fell $2 to $927/932, and palladium decreased $4 to $622/627 recently on Friday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 276.15 yuan per gram, and the December silver was flat at 4,002 yuan per kilogram.

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