Gold range-bound as dollar takes heart from expectation of tighter US policy

Bengaluru — Gold prices held steady in a narrow range on Thursday as Asian shares eased, while the dollar firmed after minutes of the Federal Reserve’s September meeting reinforced expectations of a tighter US monetary policy.

Fed policymakers are largely united on the need to raise borrowing costs further, minutes from their most recent policy meeting showed, boosting the expectation the committee will stick to its hawkish stance on raising interest rates.

Spot gold was up 0.1% at $1,223.78/oz at 4.03am GMT, hovering close to its highest since July 26 at 1,233.26/oz hit on Monday.

US gold futures were flat at $1,226.90/oz.

“Gold is closely tracking both the US dollar and equities, more so the dollar,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

“Gold has traded largely in a $2 range today, with the dollar being stronger. Prices should hold here until they find some new trigger, when they can try again for an upside,” he said.

The dollar index rose to a fresh one-week high against a basket of currencies on Thursday.

Asian stocks were capped with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.4%.

“Geopolitical and macroeconomic factors are still not indicating exuberance and risk appetite returning to markets with full throttle,” said Religare Securities analyst Sugandha Sachdeva.

Trade war concerns, recent tensions between the US and Saudi Arabia, and a hawkish Fed are among factors likely to weigh on appetite for riskier assets. This bodes well for gold as a hedge against market volatility and a portfolio diversifier, she said.

A bearish target zone of $1,208/oz-$1,217/oz remains unchanged for spot gold, following its failure to break a strong resistance at $1,235, said Reuters technical analyst Wang Tao.

Bullion was also testing resistance at the 100-day moving average of about $1,225. A convincing break above that is seen as a bullish sign for investors who follow technical signals.

“We remain neutral on gold here as we do not see the same bullish factors that were evident last week,” INTL FCStone analyst Edward Meir said in a note.

“The dollar seems to be rising again. While US equity action, although mostly negative, is showing signs of stabilising in that declines are being punctuated by more frequent counter cyclical rallies.”

In other metals, silver dipped 0.1% to $14.59/oz.

Platinum was flat at $831.50/oz and palladium was up 0.1% at $1,069.75.

Reuters