US Dollar’s Strength Weighs on Gold
London (Jan 12) Gold prices were slightly lower on the London spot market Tuesday, swinging between gains and losses, as a stronger dollar chipped away at investor demand for the metal.
Spot gold was trading down 0.3% at 1,091.39 a troy ounce in morning European trade, hitting a four-day low earlier in the session at $1,090.14 an ounce.
Gold had a strong start to 2016, bolstered by investor optimism and safe-haven demand amid global political instability. The metal has risen almost 3% since New Year’s Day.
On Monday, though, its fortunes began to reverse as the dollar firmed amid a broad sell off in commodities. The WSJ Dollar Index was recently up 0.11% at 91.04.
Gold has been flirting with $1,100 an ounce in recent trading, with the metal reaching $1,099.23 an ounce on Thursday. But some analysts question whether these levels can last as overall demand for the metal remains tepid.
“It is probably too early to say the rally is completely over, but I think we may have seen enough for the time being,” said David Govett, head of precious trading at Marex Spectron.
Meanwhile, palladium led the complex lower and hit its lowest level since July 2010 as traders, nervous about China’s worsening economic outlook, booked profits.
The most industrial of the precious metals, palladium is predominantly used in the manufacturing of autocatalytic converters in cars to reduce toxic fumes.
“Palladium prices became the latest victim of a stronger dollar and a weaker China economic outlook,” said ANZ Research in a note.
Spot palladium was trading down 2% at $467.30 an ounce, having reached its lowest level in 5½ years earlier Tuesday at $454.04 an ounce.
Among the other precious metals, spot silver was down 0.1% at $13.837 an ounce, and spot platinum was down 0.7% at $836.46 an ounce.
Source: WSJ
