Moneycontrol Be a Pro
Get App
you are here: HomeNewsWorld
Last Updated : Jul 09, 2019 11:05 AM IST | Source: Reuters

Gold edges lower as dollar firms; weaker equities limit losses

The dollar index was hovering near a three-week peak and the US Treasury yield curve hit its flattest level in more than a month after investors rolled back expectations for a sharp US rate cut at the end of July.


Gold prices ticked lower on July 9 as the dollar held near multi-week highs on reduced expectations of an aggressive US rate cut, although softer share markets capped the metal's losses.

Spot gold was down 0.1% at $1,393.95 per ounce as of 0408 GMT.

US gold futures were down 0.2% at $1,396.50 an ounce.

Close

"Weakness in gold prices is largely due to easing of rate cut expectations and bond yields are recovering. Markets continue to price in a 25 basis point cut but it looks like sentiment is easing and the dollar has rebounded," said Benjamin Lu, an analyst at Phillip Futures.

The dollar index was hovering near a three-week peak and the US Treasury yield curve hit its flattest level in more than a month after investors rolled back expectations for a sharp US rate cut at the end of July.

A week ago, the market forecast an 80.1% chance of a 25-basis-point cut, and a 19.9% chance of a 50-basis-point cut, according to CME Group's FedWatch tool. The chances are now 98% and 2%, respectively.

Adding to the reduced expectations for a larger cut, US consumers in June lifted their inflation expectations for the first time in three months, New York Fed data showed on July 8.

However, the decline in gold prices was limited by weaker financial markets, with Asian stocks falling to their lowest in two-and-a-half weeks on Tuesday.

"We're seeing a lot of Fed policy uncertainty leak into the equation across risk assets in general. Equity markets falling is the most poignant example supporting gold prices," said Stephen Innes, managing partner at Vanguard Markets.

Market participants now await Fed Chairman Jerome Powell's two-day testimony before Congress, which starts on Wednesday for clues about a rate decrease.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.15% to 795.80 tonnes on Monday from 796.97 tonnes on Friday.

Hedge funds and money managers raised their bullish stance in COMEX gold in the week to July 2, the US Commodity Futures Trading Commission (CFTC) said on Monday in a report delayed because of the US Independence Day holiday.

On the technical side, spot gold may end its correction around a support at $1,387 and then retest a resistance at $1,421 per ounce, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver gained 0.1% to $15.04 per ounce.

Palladium slipped 0.6% to $1,551.87, and platinum fell 0.3% to $811.17.

The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .
First Published on Jul 9, 2019 10:52 am
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant