Gold price hovers near lowest in a week on firm dollar

Singapore (Oct 22)  Gold was trading near its lowest in more than a week on Thursday, hurt by a stronger dollar and uncertainty over when the Federal Reserve will begin to raise U.S. rates.

Spot gold was steady at $1,168.20 an ounce by 0645 GMT. It fell to $1,163.50 on Wednesday, the lowest since Oct. 13, before paring some losses to close down 0.8 percent.

Bullion, as a non-interest-paying asset, has been weighed by uncertainty over the timing of the first U.S. rate hike in nearly a decade, losing about 1.5 percent for the year.

Market expectations for a hike have shifted to next year in recent weeks amid concerns about the global economy, although some haven't completely ruled out a rate rise in December on recent robust U.S. economic data.

"Our base case remains for higher U.S. real rates and lower
gold prices, albeit with there being risks that the gold price
weakness is pushed out further should the Fed surprise us and
remain on hold in December," Goldman Sachs said in a note. Its
economists are about 60 percent confident regarding a December
hike.
    Goldman kept its forecasts unchanged, expecting gold prices
at $1,100 in three months, $1,050 in six months and $1,000 in 12
months.
    Traders will be eyeing U.S. data due later in the session
for clues about the strength of the economy and how it could
impact the Fed's monetary policy.
    Focus will also be on the currency markets as the dollar and
euro awaited the European Central Bank meet later in the day.
The ECB is likely to stop short of actually taking new policy
steps as it awaits fresh indications about the outlook for
flagging euro zone inflation.
    The dollar was steady, holding gains from the previous
session as investors clamoured for safety against emerging
market currencies and commodity-linked units following a slide
in the Chinese stock market.
    A stronger greenback makes dollar-denominated gold expensive
for holders of other currencies.
    Charts weren't looking very good for gold.   
    Bullion briefly burst through its 200-day moving average
around $1,175 per ounce on Wednesday for a sixth straight day,
before easing back more than $10 to a session low.
    Its failure to hold above long-term resistance undermined
sentiment and increased selling pressure, traders said.
    Gold may drop to $1,155, as it has broken a support at
$1,168, Reuters technicals analyst Wang Tao said.

Source: Reuters