Investing.com – Gold dipped on Wednesday as profit-taking on its outsize gains in the previous session and strength in the dollar halted the race towards the $1,250 level targeted by holders of options contracts.
With just a day to options expiry, December on the COMEX division of the New York Mercantile settled down $5.70 at $1,231.10 a troy ounce.
In the previous session, December gold settled up $12.80 after hitting a three-month high at $1,242.80 that put it within striking distance of the $1,250 level. The spot price of bullion, meanwhile, hit a July peak of $1239.80.
Tuesday’s rally in gold was spurred by a weaker dollar, a global equities selloff and a raft of tensions, including Saudi Arabia’s crisis in the murder of journalist Jamal Khashoggi, Italy’s budget woes and the U.S.-China trade war.
Many of those factors, particularly the risk-off trade in world stock markets, were still prevalent in Wednesday’s market, bolstering gold’s strength as an inflation hedge and store of value in times of trouble, analysts said.
But the dollar’s rally weighed on gold after a reaffirmation of rate hikes signaled by Federal Reserve officials Tuesday. The , which measures the greenback against six major currencies, was up 0.5% at 96.17 by 2:36 P.M. ET (18:36 GMT).
Profit-taking after the big gains of the previous day also dictated Wednesday’s price action in gold, they said.
“It’s becoming ever more difficult for the price of gold to achieve a sustained rally,” said Walter Pehowich, executive vice president at Dillon Gage Metals in Addison, Texas. “With the much stronger U.S. dollar today, it looks like yesterday’s spot high of $1239.80 will be the level to shoot for the next time around.”
In other precious metals trading on COMEX, gained 0.3% to $14.70 a troy ounce.
lost 1.1% to $1,111.20 an ounce, while sister metal traded down 0.2% to $833.60.
Among base metals, COMEX rose 0.3% to $2.755 a pound.
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Source: Investing.com