Gold price stays steady

Published May 23, 2018

LONDON: Gold steadied on Tuesday from a 2018 low as the dollar fell from its five-month high, although risk appetite in the broader financial markets kept the metal’s gains in check.

The dollar lost momentum following a rally prompted by rising US bond yields and the prospect of a resolution to US-China trade tensions. A weaker dollar makes dollar-priced gold cheaper for non-US investors.

Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a trade war and agreed to hold further talks to boost US exports to China.

“This quarter and maybe going into next, gold will continue to struggle but the (positive) views on the US economy are overdone,” said Philip Newman, director at Metals Focus. “There are concerns over sizeable US debt, there’s the (US) mid-term elections in November, there’s enough out there that could see the dollar eventually weaken and gold prices start to improve through the back end of this year.”

Spot gold was flat at $1,291.48 per ounce by 1410 GMT. In the previous session, it slid to $1,281.76, its lowest since Dec 27.

US gold futures for June delivery were flat at $1,290.80 per ounce. Capping gains in gold, European shares inched to a near four-month high as an easing of pressure on Italian markets coincided with China’s latest move to open its economy to the rest of the world. Gold, regarded as a safe haven, tends to weaken when there is strong investor appetite for equities, seen as riskier assets.

“The overriding narrative here is where the dollar is going,” said Stephen Innes, APAC trading head at OANDA. Abating geopolitical risk was also weighing on sentiment for gold, he added.

Silver rose 0.4pc to $16.55 an ounce, while palladium fell 1.4pc to $975.72 an ounce. Platinum climbed 0.9pc to $903.70 an ounce, after marking a low for the year in the previous session at $873.50.

Published in Dawn, May 23rd, 2018

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