Gold & Silver

Gold prices slip on stronger dollar, profit-taking

Reuters July 23 | Updated on July 23, 2019 Published on July 23, 2019

The dollar rose 0.2 per cent to a near two-week high, making gold expensive for holders of other currencies.   -  Reuters

Expectations of policy easing by central banks boosted stocks globally, reducing demand for non-yielding bullion.

Gold prices dipped on Tuesday as the dollar strengthened and some investors locked in profits ahead of the US Federal Reserve meeting next week.

Spot gold was down 0.5 per cent at $1,417.41 per ounce, as of 0730 GMT. US gold futures slipped 0.6 per cent to $1,417.90 an ounce.

“Last week, we had lot of talks by the Federal Reserve on rate cut, market consensus was bit overwhelmingly and pushed prices way far,” said Benjamin Lu, analyst, Phillip Futures.

“Expect gold to trade bit lower but hold above $1,400 level as consensus is still towards a rate cut.”

Weighing on gold prices, the dollar rose 0.2 per cent to a near two-week high, making gold expensive for holders of other currencies.

Gold prices briefly surpassed the $1,450 mark for the first time in more than six-years last week after New York Fed President John Williams boosted hopes of an aggressive rate cut.

However, the New York Fed said the speech was not about potential action at the upcoming meeting.

The US central bank is widely expected to lower interest rates at its meeting ending July 31, but expectations for a larger 50-basis point cut have waxed and waned due to mixed signals from Fed policymakers.

“The market has priced in a 25 basis point cut, but a 50 basis point slash is still possible even though Fed members have talked down the probability of a deep cut in July,” Alfonso Esparza, a senior market analyst at OANDA, said in a note.

Markets are also expecting the European Central Bank (ECB) to signal easier monetary policy when it meets on Thursday.

Expectations of policy easing by major central banks boosted stocks globally, reducing demand for non-yielding bullion.

Meanwhile, Sterling was under pressure due to the likelihood that Britain's ruling Conservative party would elect Boris Johnson as its new leader and prime minister, replacing Theresa May. The result of the weeks-long internal party election will be announced on Tuesday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.57 per cent to 825.18 tonnes on Monday from Friday.

On the technical side, spot gold may fall into a range of $1,401-$1,409 per ounce as it has broken a support at $1,422, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver was steady at $16.34 per ounce.

Platinum rose 0.4 per cent to $847.75 an ounce, while palladium eased 0.3 per cent at $1,523.51.

Published on July 23, 2019

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