Comments
Gold ticked lower on Monday as strong US economic data allayed fears about a slowdown in the global economy and dimmed the metal’s safe-haven appeal, while supporting equities and the dollar.
Spot gold had slipped $1 to $1,236.60 an ounce by 0306 GMT, easing for a third straight session. The metal, however, has gained nearly 4 per cent in the past two weeks and hit a one-month high of $1,249.30 on Wednesday.
Japanese stocks led a rally in Asia on Monday, after solid US data and earnings calmed tumult in global financial markets, while the dollar also gained in strength against a basket of major currencies.
“Global equities look to have recovered from last week’s sell-off with strong gains being posted late in the week to put downward pressure on the precious metals,’’ said MKS Group’s metals dealer Sam Laughlin.
“We are expecting $1,250 to form a strong resistance to any move higher in gold, while $1,220-$1,225 should support the yellow metal in the short-term,’’ said Laughlin, adding that any further improvements to the global macro climate may see gold drop towards $1,200.
US consumer sentiment, housing starts
Markets took comfort from Friday’s US data that showed the Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly rose in early October to its highest level since July 2007, while groundbreaking for new homes rose more than expected last month.
That data reassured investors, who had been worried about the global economy and its impact on US monetary policy, and a resurgent European debt crisis.
Gold, along with other safe-haven assets such as bonds and the Japanese yen, had benefited over the past two weeks as investors sought safety from riskier equities. But the worries over the health of the global economy have not been completely removed and the markets will still be closely watching economic data.
Hedge funds and money managers increased their bullish futures and option bets in gold in the week up to October 14 after eight consecutive weekly declines, the Commodity Futures Trading Commission had said on Friday.
SPDR Gold Trust, the world's top bullion-backed exchange traded fund, has also been seen an uptick in investments. Among other precious metals, platinum and palladium continued to recover from recent losses, gaining nearly 1 per cent on Monday.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.