Gold slips as the dollar and European stocks gain

Bengaluru — Gold fell on Friday as the dollar regained momentum and an improvement in risk sentiment lifted stock markets in Europe, denting bullion’s appeal.

Spot gold was 0.4% lower at $1,221.92 an ounce at 11.30am GMT. US gold futures for December delivery fell 0.47% to $1,222.10 an ounce.

“It’s really the dollar’s move … If gold breaks below $1,220, prices can quickly go to $1,200,” said Dawei Hou, precious metals trader at MKS SA. Still, the gold market continues to be relatively quiet as investors wait for a clear catalyst to break it out of a recent tight range.

Gold has traded in a range of about $13 for the week thus far, partly due to the US Thanksgiving holiday.

A weaker euro, on signs that economic growth across the eurozone could be slowing, helped the dollar, but European stocks opened higher following a volatile week. Eurozone business growth was much weaker than expected this month as exports fell sharply, hurt by a slowing global economy and a trade war led by the US.

Market watchers are now looking ahead to the G20 summit in Argentina at the end of the month, where leaders from the US  and China are expected to hold talks against a backdrop of ongoing trade tensions.

“If there is nothing in terms of an agreement at the summit, there will be pressure on stocks. If there is an improvement, gold will go lower as people come back to stocks. People are now looking at the dollar as a safe haven,” Hou said.

On the technical front, however, gold has been trading above its 50- and 100-day moving averages and that is keeping it supported, for the moment, a the lower end, a Hong Kong-based trader said.

Among other precious metals, spot silver fell 1.6% to $14.25 an ounce and platinum slipped 0.3%, to $841.20 an ounce. Silver has mostly been following gold but its moves tend to be more pronounced, said ABN AMRO analyst Georgette Boele.

“Investors have been disappointed with silver, so they try to see if it breaks in the upside and every time it doesn’t they quickly sell it again.”

Palladium fell 0.95% to $1,142.00 an ounce. The metal was headed for its biggest weekly percentage decline since the week of July 20, down about 3% so far and drifting further away from a record high of $1,185.40 hit on November 16. 

Reuters

Source: businesslive.co.za