Gold price pares gains as dollar recovers, equities rally
London (Sept 29) Gold pared early gains on Thursday as the U.S. dollar recovered and global stocks rallied after oil
producers agreed to curb output.
The Organization of Petroleum Exporting Countries on Wednesday agreed modest oil output cuts in the first such deal
since 2008, with the group's leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low crude prices.
Oil shares pulled regional stock markets higher on Thursday.
"Once again (gold) struggled to find direction in low volumes, with regional names happy to sit on the sidelines as
gold threatens a test of the 100-day moving average around $1,310," MKS PAMP Group trader Sam Laughlin said.
"With some time still to pass until the currently expected
U.S. Federal reserve rate rise in December, gold looks likely to
hold range-bound over the short term."
Division between Federal Reserve policymakers on when to
raise U.S. interest rates has sapped investor enthusiasm for
trading on comments by officials from the central bank.
"The gold and dollar markets are currently without very
strong direction. The mixed views from U.S. Fed officials have
weakened their credibility and the market has stopped buying
(on) their comments," said Jiang Shu, chief analyst at Shandong
Gold Group.
Spot gold was steady at $1,320.62 an ounce by 0706
GMT. U.S. gold futures were up nearly 0.1 percent at
$1,324.30 an ounce.
Oil futures retreated on Thursday as the market grew more
sceptical on how OPEC would implement a plan to curb oil output,
a day after the group agreed to limit production.
"Further oil price rallies may feed more convincingly into
the gold market, especially if other non-oil commodities also
rally, and the broader commodity indices rise," HSBC analyst
James Steel said in a note.
The gold market will absorb another raft of U.S. and
European economic data on Thursday, he said. U.S. GDP numbers
are due, as well as European Union business confidence data.
"We think prices may stay on the defensive in the absence of
new developments, unless oil prices continue to rise enough to
lend support to bullion."
The dollar index, which measures the greenback
against a basket of currencies, rose 0.1 percent to $95.520
after touching a low of 95.338.
Silver fell 0.4 percent at $19.12 an ounce. Platinum
and palladium rose 0.5 percent to $1,029 and
$712.90 respectively. Palladium earlier touched its highest in
over seven weeks at $721.30.
Source: Reuters
