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Gold Prices Gain In Asia As Dollar Drifts Down, Demand Cues Eyed.
Gold prices gained in Asia on Monday with sentiment upbeat and the market well supported as recent dollar gains were taken in stride and demand cues in the physical markets were eyed ahead of end of the year holidays.
Gold futures for December delivery edged up 0.04% to $1,272.24 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices had earlier dropped to a three week low of $1,263.80. For the week gold prices were down 0.68%. The dolar index eased 0.01% to 94.71.
Investors will be focusing on Wednesday’s Fed meeting for fresh clues on the likely trajectory of monetary policy. Friday’s U.S. jobs report for October will also be closely watched.
Last week, gold prices rose on Friday, reversing earlier losses as the Catalonia parliament’s declaration of independence bolstered safe haven demand for the precious metal.
Catalonia’s parliament on Friday declared independence from Spain, adding to fears over instability in the European Union. The moves prompted Spain’s prime minister to sack the Catalan government and call elections next month.
Bullion is often used as a safe haven in times of geopolitical and economic uncertainty, while riskier assets such as equities are generally sold off.
Gold’s gains were held in check as the U.S. dollar continued to trade near three month highs against a currency basket. The index hit a high of 95.06 earlier in the session, its strongest level since July 17.
The dollar eased following a report that U.S. President Donald Trump is considering nominating Federal Reserve Governor Jerome Powell to lead the U.S. central bank, a move that would signal continuity for monetary policy.
Powell is seen less hawkish than Stanford University economist John Taylor, another potential nominee to lead the Fed.
The dollar rose earlier after the Commerce Department reported that the U.S. economy grew at a 3% annual rate in the third quarter, better than forecasts for growth of 2.5%.
The stronger-than-expected reading underlined the case for the Fed to raise interest rates at a faster pace in the coming months. Higher rates tend to make the dollar more attractive to yield seeking investors.
The dollar had already received a boost on Thursday after House Republicans passed a budget blueprint for 2018, setting the stage for a tax overhaul.
Some investors believe tax reforms could bolster growth, adding pressure on the Fed to raise interest rates, known as the \”Trumpflation\” trade.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Article from investing.com