Gold slipped in Europe on Monday as the dollar held near a one-month high against a basket of currencies, denting the precious metal’s appeal as an alternative investment, and oil prices languished.
Sentiment is cautious ahead of key US data releases later this week, especially Friday’s non-farms payrolls data, which is expected to lend fresh direction to trade. Gold dipped to $910.00/911.00 an ounce at 0944 GMT from $918.80/920.30 an ounce late in New York on Tuesday, when it fell as low as$913.80 an ounce, its weakest since July 8. “Gold is primarily taking its cue from currency movements and oil price movements, as well as the stock markets,” said Barclays Capital analyst Suki Cooper. “If we see some sharp moves there, we could seee a pick-up in gold prices, but otherwise, ahead of Friday’s data releases, we might see quite rangebound action.”
The dollar is holding near the one-month high it hit on Tuesday against a basket of currencies. Gold typically moves in the opposite direction to the greenback, as it is often bought as a hedge against currency weakness. The dollar has been boosted by a fall in oil prices and a rise in the equity markets, both of which are also pressuring gold.
European shares rose on Wednesday, mirroring a strong session in Asia, amid strong results from industrials and cheaper oil. Traders will be closely watching the crude market later in the session, amid expectations prices could fall further after US stockpile data is released at 1430 GMT. “Prices have become increasingly vulnerable to oil price movements, which could see gold trade erratically throughout the day as investors watch oil,” said Standard Bank analyst Manqoba Madinane. Oil is trading just above $122 a barrel, down around $25 from the record high it hit earlier this month. (Reuters)