Gold price recovers after firm dollar drives it to 1-week low

New York (Oct 19)  Gold prices edged up on Thursday after hitting the lowest level in more than a week, driven down
by a firm dollar, that dented demand for dollar-priced gold, and by soaring stock markets.

The dollar index was broadly steady against a basket of major currencies, having spiked briefly overnight after
10-year U.S. Treasury yields rose on rate hike expectations and investor risk appetite.      

World stock prices, which often trade counter to gold, set fresh record highs before stalling in Europe on nervousness over
political turmoil in Spain, the eurozone's fourth largest economy.           

"There's technical reasons why we've stabilised (plus) stocks have come off (but overall) people are not finding much
value investing in gold at the moment," said Fawad Razaqzada, analyst at FOREX.com

"The lack of safe haven demand combined with expectations of higher interest rates is weighing on gold. If gold remains below
$1,300 there's a risk of a deeper correction in the coming days or weeks."

Spot gold rose 0.4 percent to $1,285.40 an ounce as of 1017 GMT after earlier hitting its lowest since Oct. 9 at
$1,276.22. The precious metal has lost 6 percent since September 8.

U.S. gold futures for December delivery rose 0.3 percent at $1,287.40.

The term of current Fed Chair Janet Yellen's expires in February and investors are keen to see who U.S. President Donald
Trump will pick as her replacement. The White House said Trump would announce his decision in the "coming days".           
    "Depending on how the dollar goes, we might look at
$1,250-60 as the next stop for gold to trade down. We don't see
an immediate upward catalyst for gold except for North Korea,"
said Richard Xu, a fund manager at China's biggest gold
exchange-traded fund, HuaAn Gold.
    Higher interest rates tend to boost the dollar and push up
bond yields, putting pressure on gold by increasing the
opportunity cost of holding non-yielding bullion.
    U.S. interest rates futures saw modest losses on Wednesday
after the release of the Fed's Beige Book, but traders still saw
an 80 percent chance of the U.S. central bank raising rates in
December.                   
    "Looks like fundamentally the (U.S.) economy is doing pretty
well, so that will also put downward pressure on gold," Xu said.
    Silver rose 0.4 percent to $17.10 an ounce, platinum
       rose 0.8 percent to $925 and palladium climbed 0.7
percent to $960.50.
    Platinum and palladium hit one-week lows earlier.
    Palladium rallied to a 16-year high this week and may
spike further on rising auto sales in China and as consumers
replace vehicles damaged by hurricanes in the United States.