Gold near 3-month low on dollar, investors await Fed

Analysis

Gold extended losses, hovering near a three-month low, after the dollar surged against the euro, prompting investors to liquidate some of their holdings.

Investors await the outcome of a meeting by the US Federal Reserve amid expectations it is ready to signal a pause in its interest rate cutting, which in theory will support the dollar but reduce gold's appeal as an alternative investment.

Gold dropped to $871.85/872.85 an ounce from $873.55/874.75 an ounce late in New York on Tuesday, when it tumbled to $868.20 an ounce, its lowest since late January, on a combination of a rise in the dollar and a fall in oil.

Gold has lost more than 15% in value since spiking to a record high at $1,030.80 on March 17. The drop has attracted physical buying from jewelers, which may offer support for gold, at least for now, said dealers.

“I'd suggest we're probably looking at a range for about $868 as the next support, with that resistance now at the $875 level,” said Darren Heathcote of Investec Australia in Sydney.

“There's been physical buying around. I'd suggest that given that we are $60 or so lower than we were about a week ago, it would have spurred some physical buying, thinking there's a possibility of a further bounce.”

The Federal Open Market Committee will unveil its decision on Wednesday, when it is expected to cut rates by a quarter percentage point to 2%, which would take its total rate slashing over the past seven months to 3.25 percentage points.

“We've seen selling in Japan, and it looks gold will head lower again but everything really depends on the FOMC decision,” said a dealer in Hong Kong.

“Maybe support will be around $870 in Asia,” he said.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $3.5 an ounce to $873.1 an ounce.

The dollar barely changed at ¥104.05, while the euro was flat at $1.5570, holding near a one-month low of $1.5540 hit the previous day.

Spot platinum fell to $1,914/1,924 an ounce from $1,918/1,938 late in New York.

Most active Tokyo platinum futures fell ¥250 per gram to ¥6,200.

Silver edged down to $16.49/16.56 an ounce from $16.51/15.59 an ounce. Spot palladium inched down to $420/428 an ounce from $421/429 an ounce. (Reuters)

ADVERTISEMENT

Used car prices on the rise Analysis

Used car prices on the rise

Meeting called to address Pegasus spyware lacks quorum  Parliament

Meeting called to address Pegasus spyware lacks quorum 

New financial director at Heineken Hungária Appointments

New financial director at Heineken Hungária

Zsa Zsa Gabor's ashes buried in Budapest City

Zsa Zsa Gabor's ashes buried in Budapest

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.