Gold is steady as investors’ risk appetite improves

London — Gold prices were little changed on Tuesday as investor focus shifted to bullish global economic fundamentals and away from trade concerns, helping lift equities and keeping the dollar steady near a six-month high.

Investors are awaiting economic data that might confirm the US economy is on track for a strong June quarter, with rising bond yields also supporting the greenback and making dollar priced gold costlier for non-US investors.

Spot gold was flat at $1,292.23/oz by 9.43am GMT. It is down 0.5% so far in June having fallen 1.3% in May.

US gold futures for August delivery were down 0.1% at $1,296.20/oz.

“Prices have been dropping since May in anticipation of a Fed rate increase. There’s still some strengthening of the dollar to come. Geopolitics is on the back burner,” said Bernard Dahdah, precious metals analyst at Natixis.

Stronger than expected US jobs data released on Friday, fuelled the expectation that the Federal Reserve would raise interest rates at its policy meeting starting on June 12.

Higher interest rates boost the dollar and reduce investor interest in non-yielding bullion. A strong reading on ISM non-manufacturing purchasing managers index (PMI) for May later this session will seal the case for another rate increase at its policy meeting next week, following up on a rate hike in March and might even prompt the Fed to strike a hawkish stance.

“There is lack of interest in gold. It is more interesting for equities and people are making profit there, so nobody wants to trade in gold for the time being,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Asian stocks steadied as investors paused for breath after the previous day’s rally, although tech-inspired Wall Street gains supported broader bullish sentiment.

Spot gold was still targeting the May 21 low of $1,281.76/oz, as its bounce from this level had completed, said Reuters technical analyst Wang Tao.

In other precious markets, silver stood at $16.39/oz.

Platinum fell 0.6% at $894.90/oz. It earlier hit a low of $891.25, the lowest since May 21. Palladium was 0.3% lower at $990.80/oz. The metal rose to a six-week high of $1,010.50 in the previous session.

Reuters

Source: businesslive.co.za