Firmer dollar weighs on gold, palladium hits 2-year peak

New York (Mar 23)  Gold was barely changed on Thursday, weighed down by a firmer dollar, while palladium hit its highest price in 22 months, helped by economic data.

Spot gold was flat at $1,248.91 an ounce at 1339 GMT, retreating from an intraday peak of $1,253.12, its highest since Feb. 28.

U.S. gold futures was also barely changed, up 0.03 percent to $1,250.20.   

"The most important reason is that the dollar is stronger and yields in the U.S. are edging a little higher. Later in the year I expect prices to move higher, but for the moment $1,250
is the top end of the range," said ABN Amro commodities strategist Georgette Boele in Amsterdam.

The dollar index, which measures the greenback against a basket of currencies, was slightly firmer at 99.716. It had dropped to its lowest in nearly seven weeks at 99.547 on
Wednesday. 

The dollar briefly slipped after U.S. jobless claims
unexpectedly rose, sending gold temporarily higher.      
     But with jobless levels still below a level associated with
a strengthening labor market, the dollar and gold largely
returned to previous levels.            
    OCBC analyst Barnabas Gan pointed to the impact of sustained
political stresses in Europe and the United States.
    "This kind of uncertainty does lift gold prices," he said.
    The immediate focus is on whether U.S. President Donald
Trump can gather enough support to pass a bill to roll back
Obamacare, representing a major test of his legislative ability
and whether he can keep his promises to business.           
    A rough ride for the healthcare plan could affect Trump's
efforts to cut taxes and boost infrastructure, with the
potential to drive more investors to gold as a safe haven if
stock markets fall, analysts and traders said.
    "A sustained break and close above $1,250 will be the key
for a test of the 200-day moving average at $1,259.50, while
support initially sits at $1,244-$1,245," said MKS PAMP Group
trader Sam Laughlin.
    Palladium       , meanwhile, climbed to a peak of $806.80 --
its highest since March 11, 2015 -- before paring gains to
$801.50 for a rise of 1.9 percent.
    "Palladium has a completely different dynamic (to other
precious metals)," Boele said. "It is far more related to
economic data releases, the expectations for the economy, both
emerging and developed."
    The European Central Bank said on Thursday that economic
recovery in the euro zone was gaining ground while data last
week indicated strong U.S. factory output, a rebound in U.S.
consumer sentiment and a rise in European car sales in February.
                                   
    Palladium is mainly used in catalytic converters that curb
pollution from vehicle exhausts.
    Spot silver        rose 0.6 percent to $17.61 while 
platinum        advanced 0.5 percent to $963.60.

Source: Reuters