Gold bounces off 3-month low as dollar halts rally
New York (Mar 12) Gold bounced off the previous session's three-month low on Thursday, as traders continued to monitor the direction of the dollar to gauge the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery rose $10.10, or 0.88%, to trade at $1,160.70 a troy ounce during European morning hours. Prices held in a range between $1,149.30 and $1,165.50.
Futures were likely to find support at $1,141.70, the low from December 1, and resistance at $1,174.40, the high from March 9.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.65% to 98.99, after touching an intraday high of 100.05 earlier, the most since April 2003.
Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
On Wednesday, gold fell to $1,146.50, a level not seen since December 1, before ending at $1,150.60, down $9.50, or 0.82%, as the U.S. dollar rallied amid growing expectations for higher interest rates in the U.S.
Last week’s stronger-than-forecast nonfarm payrolls report for February solidified expectations for a mid-year rate hike and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Market players awaited U.S. data on jobless claims and retail sales later in the trading day for further indications on the strength of the economy.
Meanwhile, silver futures for May delivery climbed 20.8 cents, or 1.35%, to trade at $15.57 a troy ounce. On Wednesday, silver touched $15.26, the lowest level since December 1.
Elsewhere on the Comex, copper for May delivery tacked on 5.1 cents, or 1.96%, to trade at $2.657 a pound as a recent batch of weaker than expected Chinese economic data fuelled speculation policymakers in Beijing will have to introduce further stimulus measures to boost growth and ward off deflation.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Source: Investing.com
