Gold price consolidates gains near two-week high

The price of gold has consolidated its gains so far in today’s European session, remaining close to its highest level in over two weeks as investors continued to mull the timing of a rise in US interest rates.

Gold for immediate delivery had shed 33 cents, or 0.03 percent, to $1,192.62 per troy ounce as of 10:25 GMT, about 2.4 percent beneath its 50-day simple moving average of $1,221.90. Bullion was trading not far away from yesterday’s intraday high of $1,194.93, which was its strongest since 06 March.
Meanwhile, the price of gold for April delivery, the most actively traded contract on the COMEX in New York, had dropped $1.6 to $1,190.9 an ounce as of 09:40 GMT. The contract has rallied 3.7 percent since last Wednesday after the Federal Open Market Committee (FOMC) come out with a surprisingly dovish statement on hiking borrowing costs, citing weakness in consumer inflation as one of the main reasons for caution.
According to Marex Spectron broker David Govett: “I cannot see the Fed raising rates in the near future with inflation non- existent, so the current dollar weakness may be with us for a while”. Yesterday’s CPI report from the US Department of Labor saw prices climb last month for the first time since October. Govett further claimed that a hike in interest rates from the Fed “will happen at some stage and with the rest of the world on an economic slowdown, the US may be the only game in town. In the long run, I would still want to be long dollars, short precious metals.”
The precious metal complex has received support from the depreciation of the US dollar. The DXY dollar index, which pegs the greenback against six of its major peers, eased last week, retreating from a 12-year high that had put pressure on commodities. As of 09:57 GMT, the gauge stood at 96.9450, down 0.26 percent on the day.
“While the dollar is on a back foot […] sentiment may well remain more positive for bullion and the PGMS,” said FastMarkets analyst Will Adams. “We still feel it will take the gold price to establish itself back above $1,200 to reduce the current vulnerable chart picture.”
In other metals, at last check platinum for April delivery had gained $2.6 to $1,145.45 per troy ounce, palladium futures for June were up 0.77 percent at $768.95, while May silver gained five cents to $16.97.