Gold inches down on steadier dollar ahead of Fed minutes
London (Feb 19) Gold was little changed on Wednesday as the dollar steadied and investors remained cautious ahead of the release of the minutes from the US Federal Reserve’s January meeting.
The price of bullion has risen by about 9% this year and touched $1,332.10/oz on Tuesday, its strongest since 31 October, before shedding gains.
However, VTB Capital analyst Andrey Kryuchenkov said that attempts at profit-taking have been countered by some buying activity as people remain undecided ahead of the Fed minutes later on Wednesday.
"More weak US data could allow the Fed to push back tapering and in turn could push back expectations for a stronger dollar ... that could still help the metal to rise towards $1,350 in the short term," he said.
Spot gold eased 0.1% to $1,319.99/oz by 3.24pm GMT.
Technically, near-term resistance levels for spot gold stand at $1,338 and the July high of $1,348, analysts said.
US gold futures slipped 0.3% to $1,320.60/oz.
Investors have been seeking shelter in gold on fears of slowing growth in China, with a string of US data showing that the world’s largest economy had been hit by the cold weather there.
Continued data weakness put pressure on the dollar, which hit its lowest level for the year against a basket of currencies earlier on Wednesday before regaining some ground to be up nearly 0.1% by 3.51pm GMT.
Gold usually holds an inverse relationship with the dollar, as a stronger US currency makes dollar-denominated assets such as bullion more expensive for foreign investors.
Recent surveys from jobs and house building to confidence and manufacturing have left financial markets wondering whether the Federal Reserve might consider tweaking its stimulus withdrawal plans if the economic picture were to deteriorate.
New Fed chief Janet Yellen indicated this month that the central bank remains inclined to keep tapering.
ETF flows
Holdings of the largest gold-backed exchange-traded fund(ETF), New York’s SPDR Gold Trust, fell 0.63% on Friday from Thursday, while the largest silver-backed ETF, New York’s iShares Silver Trust, fell 0.59%. Premiums for gold bars in Hong Kong were steady at $1.30 to $1.70 an ounce over the spot London prices. Silver fell 0.3% to $21.81/oz, platinum gained 0.3% to $1,423.24/oz and palladium rose 0.4% to $736.47/oz.
The world’s top three platinum producers said that South Africa’s platinum industry had so far lost $405-million because of strike action and their latest pay offer to miners of 7-9% over three years "pushes the boundary of what is affordable and sustainable".
Source: Reuters
