Gold Price slips as dollar strengthens

London (Jan 7)  Gold slipped on Friday from the previous day’s one-month high as the dollar strengthened against a basket of currencies, lifted by US non-farm payrolls data that showed a slowing in hiring last month but an increase in wages.

Spot gold was down 0.4 percent at $1,175.90 an ounce by 1526 GMT. The metal was still 2.2 percent higher this week, its biggest weekly rise in two months, helped by a broad weakening of the dollar earlier in the week and a retreat in US bond yields. But with markets uncertain ahead of President-elect Donald Trump’s inauguration on Jan. 20, investors turned cautious after gold reached its highest since Dec. 5 at $1,184.90 on Thursday.
“Any profit that can be booked at this early stage is welcomed by most, so that is why we are seeing a scaling back a bit,” said Saxo Bank analyst Ole Hansen.
US gold futures were down 0.4 percent at $1,176.30. Higher interest rates exert downward pressure on the gold price by increasing the opportunity cost of holding non-yielding bullion.
“If we can manage to hold above $1,162 then the market has the potential of moving up toward testing the really big area of resistance, which is just above $1,200,” Saxo Bank’s Hansen said.
Among other precious metals, palladium hit a five-week high of $755.40 an ounce before slipping back to $744.95, up 0.9 percent.
The metal used in vehicle catalysts to clean exhaust emissions has risen 10 percent this week, its biggest gain since the week ending July 1, driven by data that showed US sales of new cars and trucks hit a record high in 2016. Spot silver was down 0.7 percent at $16.46, having hit a peak of $16.71, its highest since Dec. 15, in the previous session. Platinum was 0.6 percent lower at $961.99, putting it on track for a gain of 7.2 percent this week.
The metal touched its highest in nearly eight weeks at $975.80 on Thursday.

Dollar to extend rally
The US dollar will keep strengthening against the euro with even chances of reaching parity this year, a Reuters poll showed on Friday, on expectations that Trump’s planned tax cuts will force interest rates higher.
It was also expected to strengthen against Britain’s pound and to stay buoyant against a basket of major currencies.
The findings suggest a good amount of optimism still prevails among currency strategists about the impact Trump’s policies will have on growth, inflation and interest rates, especially considering the dollar has rallied almost 4 percent to a near 14-year peak last year.

Euro near parity?
After calling for the euro to rise right until the US election result, strategists have once again taken to forecasting a weaker euro owing to diverging monetary policy between the Fed and European Central Bank, as well as important elections in several eurozone countries.
“The main risk of the euro falling down further against the dollar should come from elections in Netherlands, France, Germany, and maybe in Italy. In case of a very large vote in favor of euroskeptic candidates or parties, the euro should suffer,” said Jean Louis Mourier, economist at Aurel BGC in Paris.
While the 12-month consensus is for the euro to weaken to $1.04 from $1.06 now, respondents gave a median 50 percent chance of it reaching or falling below parity to the dollar in 2017, not seen since late 2002 when it was on its way up.

Source: ArabNews