Solid dollar keeps gold near two-week low

Bengaluru — Gold hovered near a two-week low on Wednesday as the dollar remained buoyant ahead of a speech by US Federal Reserve chair Jerome Powell that is expected to offer clues on the central bank’s monetary policy.

Spot gold was down 0.1% at $1,213.62 per ounce at 11.03am GMT, having dipped to its lowest level since November 15 at $1,211.36 in the previous session.

US gold futures were flat at $1,213.20.

“The dollar is slightly stronger again, which is largely dictating gold prices at the moment. Until the Fed chair’s speech, we are not going to see much movement,” ING analyst Warren Patterson said.

“Gold should stay fairly range-bound in the short term. I struggle to see it breaking below $1,200 and likewise on the upside until the end of this year, I struggle to see it breaking above $1,250 as well.”

The dollar index rose to its highest since November 13. The currency has risen for previous three sessions, taking it near its year high of 97.69.

The dollar gained momentum after Fed vice-chair Richard Clarida backed further interest rate hikes, on Tuesday, weighing on noninterest bearing bullion.

Investors will also focus on minutes from the Fed’s November policy meeting that will be released on Thursday. US President Donald Trump criticised the Fed on Tuesday, saying rising interest rates and other Fed policies were damaging the US economy.

“As we go into 2019 people are becoming a bit more worried about the dollar as we start seeing a slowing growth in the US, and we might see an upside in gold,” Patterson said.

The Group of 20 (G20) summit later this week is also on investors’ radar, with all eyes on a meeting between Trump and his Chinese counterpart, Xi Jinping.

Trump said earlier this week it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs.

Expectations are that the dollar will remain firm ahead of the G20, weighing on the metal, which has slipped below $1,220, traders at MKS PAMP said in a note.

“Initial support sits at $1,210; however, $1,200 may be tested over the coming sessions. On the topside, $1,220 now looms as a key resistance level and pivot point for the metal.”

Among other precious metals, spot silver rose 0.1% to $14.16 per ounce, having fallen to a near two-week low of $14.05 in the previous session. Palladium gained 0.6% to $1,157.24 per ounce.

Platinum was up 0.2% at $831.20 per ounce. Prices hit their lowest since November 15 at $825.25 on Tuesday.

The global platinum market will be oversupplied by about 500,000 ounces both in 2018 and 2019, an industry report said, suggesting little respite for producers facing prices languishing near 10-year lows. 

Reuters