Gold Rebounds as Dollar Dips; Bulls Look to Europe Woes, Dovish Fed

Investing.com – Gold could form a solid base at the $1,250 level amid the narrative of a Europe in trouble and a Federal Reserve likely to pause rate hikes.

“Some economists over the pond have been quietly starting to use the word ‘recession’,” Walter Pehowich, executive vice-president at Dillon Gage Metals in Addison, Texas, said, referring to the combined challenges facing Europe’s largest economies: Britain, France and Germany.

“Here in the U.S., day after day, the odds of a rate hike in December are starting to diminish,” he added in his daily note on precious metals. “If they do raise rates in December, a PAUSE in the first quarter should be in order.”

With the Fed’s December rate hike decision exactly a week away, bets for a in 2018 are less 80% after dovish signals from central bank speakers over the past two weeks.

Benchmark COMEX for February rose $2.80 to settle squarely at $1,250 a troy ounce on Wednesday on Brexit concerns, street protests in France and disquiet over Germany’s immigration policies. With its latest session high of 1,252.25 closing in again on Friday’s 5-month peak of $1,255.80, most gold watchers now believe the yellow metal has more than a fair chance of returning to April highs of above $1,300.

The pound initially tumbled against the dollar in European trading Wednesday on concerns about a potential vote of no-confidence British Prime Minister Theresa May. But the greenback slid in the U.S. session on the back-and-forth speculation over the Fed’s near-term rates direction.

By 2:26 PM ET (19:10 GMT), the Dollar Index, a contrarian trade to bullion, was down 0.3% at 97.03.

Among other precious metals on COMEX, rose 1.4% to $14.83 per ounce.

also gained 1.4% to $1,194.10 per ounce, while sister metal jumped 2.4% to $804.20.

In base metals, COMEX slipped 0.2% to $2.76 per pound.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.