Gold stays capped by US dollar strength

The spot gold price inched higher during Asian trading hours on Thursday November 17 but stays checked by a strong US dollar.

The spot gold price was recently quoted at $1,227.40/1,227.80 per oz, up $1.30 on the previous close. Trade has ranged from $1,225.15 to $1,228.15 so far.

In currencies, the US dollar index hit as high as 100.57 on Wednesday – the highest since April 2003. The index was recently at 100.29 on Thursday, up 0.05% from the previous day’s close.

“The key here is that if we see the dollar index break through [crucial resistance level] 100.78, then it is likely we will see gold break $1,200. Should that occur, the long term uptrend instigated earlier in the year is over. A break below this critical support level could lead to a significant period of downside for gold,” Joshua Mahony, a market analyst at IG, said.

Safe-haven assets such as gold will be in turmoil for the rest of the year because the risk-on sentiment induced by Donald Trump’s victory is likely to continue until the market realises the flaws in Trump’s policies and its potentially damaging implications for the longer term, Metal Bulletin Research analyst, Boris Mikanikrezai, said.

“The dollar and US real rates may continue to appreciate, prompting further falls in monetary demand for gold, weakening prices. But selling pressure in gold could be partly offset by resilient European ETF investor demand given heightened political uncertainty and stronger physical demand in Asia – especially if domestic prices become more attractive – due to favourable seasonality,” he said. 

In data, key US economic figures released Wednesday mostly fell short of forecasts – the PPI came in at 0.0%, the core PPI at -0.2%, the capacity utilisation rate at $75.3% and industrial production at 0.0%. The NAHB housing market index was as expected at 63.

US data due later today includes building permits, CPI, core CPI, Philly Fed manufacturing index, unemployment claims and housing starts.

In other commodities, the Brent crude oil spot price rose 0.35% to $46.47 per barrel, and the Texas light sweet crude oil spot price increased 0.02% to $45.45 recently on Thursday.

In equities, the Shanghai Composite fell 0.47% to 3,189.99 so far on Thursday.

In the other precious metals, the spot silver price rose $0.008 to $16.965/17.01 per oz. Platinum at $944/949 per oz was up $6 while palladium increased $6 to $716/722 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 277.05 yuan ($41) per gram, and the June silver was at 4,146 yuan per kilogram.

The post Gold stays capped by US dollar strength appeared first on The Bullion Desk.

from The Bullion Desk http://ift.tt/2f2mLPj
via IFTTT