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Gold firms as dollar retreats

Updated May 15, 2018

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LONDON: Gold prices edged higher on Monday as the dollar retreated from a 2018 peak after subdued US inflation data last week highlighted the prospect of fewer US interest rate increases than previously expected this year.

Spot gold was up 0.2 per cent at $1,320.8 an ounce at 1348 GMT, having on Friday touched $1,325.96, its highest since April 26. US gold futures were unchanged at $1,320.7.

A weaker US currency makes dollar-denominated gold cheaper for holders of other currencies — a relationship used by funds to generate buy and sell signals. Though the dollar eased on Monday, its performance against a basket of other major currencies touched 93.416 last week for a gain of more than 4pc since April 17 and its highest level since December.

“Gold’s trading range in the first four months between low and high price was the lowest in percentage terms since it was fixed to the dollar in 1971,” Turner said.

An increase to US interest rates, possibly in June at the Federal Reserve’s next meeting, will weigh on gold, though analysts say that would be unlikely to push gold significantly lower.

“Over the short term, and particularly during May, we see gold trading between $1,285 and $1,338 an ounce as continued strength in the dollar and rising rates pressure values lower,” said INTL FCStone analyst Edward Meir.

Traders said that falling gold imports by India, a top consumer, were also undermining sentiment.

Silver was up 0.1pc at $16.63 an ounce, platinum gained 0.2pc to $923.20 and palladium added 0.1pc to 996.75.

Published in Dawn, May 15th, 2018