https://www.miningweekly.com

Gold hits 4-week low on firm dollar, Brexit talks lend support

19th June 2017

By: Reuters

  

Font size: - +

LONDON – Gold hit four-week lows on Monday as the dollar held firm and the market waited for comments from a top Federal Reserve official on US monetary policy, but prices were supported by the start of talks on the terms of Britain's departure from the European Union.

Spot gold was down 0.2% at $1 251 an ounce by 08:52 GMT, up from an earlier $1 248.63, its lowest since May 24. US gold futures fell 0.3% to $1 252.5.

New York Fed President William Dudley is due to take part in a roundtable with local business leaders later on Monday.

Dudley's comments, if hawkish, could reinforce the dollar's uptrend, which when it rises makes dollar-denominated commodities more expensive for holders of other currencies, potentially weakening demand.

"The dollar is a large part of what's going on with gold," said ING commodities strategist Warren Patterson. "I do see some support from uncertainty about the UK government and the start of Brexit negotiations."

British Prime Minister Theresa May failing to win a parliamentary election earlier this month has, alongside Brexit negotiations starting on Monday in Brussels, fuelled political uncertainty.

Weighing on gold is a drop in holdings of physically-backed exchange traded funds to 55.231-million ounces from 55.654-million ounces last Wednesday, when the Fed raised rates and pushed the dollar index to two-week highs.

On the technical front, support for gold kicks in at $1 248, near the 100-day moving average, and resistance sits at $1 260, near the 55-day moving average, traders said.

"There's very strong support at the 200-day moving average, just below $1 240," one trader said.

Elsewhere, palladium was up 1.5% at $873.65 an ounce. Earlier this month the metal used to make autocatalysts for gasoline-fuelled cars hit a 16-year high at $914.70 an ounce as the market fretted about shortages in the near term.

But analysts say palladium's gains of more than 25% so far this year may not be justified given slowing auto sales.

"There are some concerning signals from the two largest gasoline (palladium) auto markets, the US and China," ICBC Standard Bank analysts said in a note.

"The pace of sales growth in both countries has slowed sharply this year. There are a several reasons why, namely credit, a maturing business cycle, and reduced incentives."

US passenger car sales fell 9.8% in May from a year earlier. In China the drop was 0.1%, but expectations are for further falls over coming months.

Silver gained 0.3% to $16.63 an ounce and platinum slid 0.2% to $922.50 an ounce.

Edited by Reuters

Comments

The functionality you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION