Gold price steadies as lower shares offset higher dollar

London (Aug 3)  Gold was little changed on Wednesday, hovering close to a three-week high hit in the previous session, as the impact of lower European share markets
was offset by a steadier dollar.   

Spot gold was up 0.1 percent at $1,364.00 an ounce by 1012 GMT. It hit $1,367.33, its highest since July 11, on Tuesday.

European shares edged down, following heftier losses in Asian markets, while the dollar recovered from Tuesday's six-week low, up 0.2 percent against a basket of currencies.

A higher dollar makes gold more expensive for foreign currency holders, while an increase in risk appetite curtails interest in the metal, seen as a safer bet.
    The dollar suffered after weak U.S. economic data undermined
expectations of a near-term interest rate hike.
    A report from the U.S. Commerce Department on Tuesday showed
inflation was still muted in the country, which together with
the anaemic economic growth pace in the second quarter, could
encourage a cautious Federal Reserve to keep interest rates at
current levels for a while. 
    An increase in U.S. interest rates would lift the
opportunity cost of holding gold, which has surged about 28
percent this year on expectations the Fed would keep them
unchanged.
    Investor attention will now shift towards the monthly U.S.
non-farm payrolls report, due on Friday.
    "The weaker dollar this has helped lift the commodity
complex with the exception of oil this year, but our expectation
is that the U.S. economy remains on track for reasonable
growth," Oxford Economics commodity director Daniel Smith said.
    "Notwithstanding a really poor GDP print, there is a
probability that non-farm payrolls will be very good and that
brings back rate hikes back on the agenda and therefore the
dollar will strengthen and gold will come off."
    Spot gold may retrace moderately to a support at $1,358 per
ounce before retesting a resistance at $1,368, as suggested by
its wave pattern and a Fibonacci projection analysis, Reuters
technical analyst Wang Tao said.
    Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.6 percent to 969.97
tonnes on Tuesday.
    Among other precious metals, spot platinum fell 0.5
percent to $1,159 per ounce, after touching $1,177.40, its
highest since April 2015, in the previous session.
    Spot palladium fell 1.5 percent to $703.75 per ounce,
after rising to $722.90 on Tuesday, the highest since June 2015.
    Spot silver was unchanged at $20.58 per ounce, a day
after touching a four-week high of $20.78.

Source: Reuters