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Tuesday, May 24, 2022

Gold claws higher on weak dollar, but more downside seen

Gold claws higher on weak dollar, but more downside seen

LONDON: Gold prices edged up on Friday from six-month lows as the dollar slipped but the modest nature of the recovery suggested speculators might still be poised to punish the metal further.

Spot gold was up 0.2 percent at $1,268.65 an ounce, by 1017 GMT. In the prior session, bullion touched $1,260.84, its lowest since Dec. 19, 2017.

US gold futures for August delivery were unchanged at $1,270.50 per ounce.

“Gold has not moved a lot higher and that worries me. If the dollar is weaker and gold is not reacting much, that’s usually a bad sign, that means that you’ll probably get more downside,” said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam.

“People think that since gold failed at the $1,300 level, they are seeing how far they can push it down and then move it up again. I would say it should bottom out anywhere between $1,250 and $1,200.”

Gold tumbled last Friday after repeatedly failing to surmount the $1,300 level as speculators rushed to liquidate long positions and others put on bearish positions.

The dollar pulled back from an 11-month peak against a basket of major currencies on Friday, as the euro strengthened after a survey showed Euro zone private business growth recovered in June.

A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.

Commerzbank agreed that gold was unlikely to recover in the near-term even with potentially destabilising events such as the Turkish presidential election on Sunday and a European Union summit later next week.

“If gold is not even in demand as a result of the escalating trade dispute between the US and China, we do not believe that the other upcoming events will do much to sway the opinion of market participants,” a note from the German bank said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.5 percent to 824.63 tonnes on Thursday.

Auto catalyst metals platinum and palladium rose 0.1 percent to $862.65 and added 0.8 percent to $958.80 per ounce respectively, but were headed for weekly declines of over 2 percent.

Earlier in the session, platinum touched $851.74, the weakest since February 2016, while palladium slipped to a seven-week low of $947.15 an ounce.

Silver gained 0.7 percent at $16.43 an ounce after falling to its lowest since May 2 at $16.16 in the previous session.

Copyright Reuters, 2018

Source: Brecorder

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