Gold at $1275 on Stronger U.S. Dollar
Gold settled near its lowest in two months on Monday, pressured by a stronger U.S. dollar and a rally in global financial markets.
U.S. gold futures ended $1.30 lower at $1,278.90 an ounce.
Spot gold was down 0.2 percent at $1,278 an ounce. The metal last week posted a weekly loss of 1.8 percent, its biggest such fall in a month, after it set a two-month low at $1,273.06 on Thursday, hurt by strong U.S. economic data and speculation of an early interest rate increase.
The U.S. benchmark S&P breached the 2,000 mark for the first time as expectations that the European Central Bank would move to boost economic growth sent global financial markets shooting higher.
“Equity markets continue to be strong, robbing gold of the opportunity to go higher,” said HSBC precious metals analyst James Steel.
The dollar gained, weighing on dollar-denominated commodities as it makes them more expensive for holders of other currencies.
“It is certainly the dollar that is weighing on the gold price, putting a break on any significant recovery for the time being,” Commerzbank analyst Daniel Briesemann said.
Even so, price moves and trading volumes were subdued throughout the day. The metal held above chart support around $1,270, traders said, as liquidity was drained by the absence of British players on a holiday-lengthened weekend.
At a gathering of central bankers in Jackson Hole, Wyoming, Federal Reserve Chair Janet Yellen last week stressed the need to move cautiously on raising rates. Higher interest rates would hurt the attractiveness of non-interest-bearing assets such as gold.
Falling bullion prices attracted buying from jewellers in Asia, but the amount was limited and investors stayed on the sidelines, traders said.
Source: CNBC
