Gold price retreats from three-week high as equities recover ground
iNVEZZ.com, Thursday, January 08: The price of gold has extended yesterday’s drop so far in today’s trading session. Demand for bullion waned after a recovery in global equity markets and on a further strengthening of the US dollar.
Gold for immediate delivery had shed 0.27 percent, or $3.30, to $1,207.34 an ounce as of 08:57 GMT, and was trading 1.41 percent above its 50-day simple moving average of $1,190.51. Yesterday, the precious metal ended the session 0.6 percent down at $1,210.64, retreating from a three-week high of $1,222.95 touched on Monday. Bloomberg cited an e-mail from Wang Tao, a strategist at CITIC Futures Co., as saying:
“We see a bit of calm returning to the equity and oil markets, so gold takes a back seat again […] We continue to expect that the Fed will raise rates this year, which will drive the dollar higher and pressure gold.”
On the COMEX in New York, gold for February delivery had fallen $3.6 to $1,207.4 as of 09:33 GMT. Holdings in the SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund (ETF), fell 0.42 percent to 704.83 tonnes yesterday, their lowest since late 2008.
According to INTL FCStone analyst Edward Meir, as reported by Reuters, gold is unlikely to get much support from investment flows this year, although bullion may climb higher should there be a sizable correction in equities. In his view: “We are calling for a $1,000-$1,350 trading range for gold in 2015, with the downside being reached if equity markets do well and if the dollar remains on an upside trajectory”.
A stronger dollar tends to have a negative influence on the price of gold, as it makes dollar-denominated precious metals more expensive when converted to other currencies. The DXY dollar index, which pegs the greenback against six of its major peers, reached a fresh nine-year high of 92.323 earlier today. The gauge stood at 92.255 as 09:08 GMT, up 0.40 percent intraday.