Gold eased on Tuesday as the dollar firmed, even as expectations of a near-term US interest rate hike lost steam after last week’s disappointing US growth figures.
The dollar index, which measures the greenback against a basket of six major currencies, rose 0.1 per cent to 95.824, having fallen to as low as 95.384 last week when it posted its biggest loss in three months.
Spot gold inched down 0.3 per cent to $1,348.46 an ounce at 0328 GMT, after closing up 0.2 per cent at $1,352.85 on Monday.
Gold hit a high of $1,355.10, its highest level since July 12, on Friday. US gold edged down 0.3 per cent to $1,355.2 an ounce.
“Firm dollar is bringing down gold by a bit,” said a Japanese trader.
Spot gold is biased to break a support at $1,346 per ounce and fall towards the next support at $1,328, as indicated by its wave pattern and a Fibonacci retracement analysis, Reuters technical analyst Wang Tao said.
“Gold continues to trade with a bid tone and we see $1,345 - $1,350 as broadly supportive over the short-term as the metal looks for a break higher towards $1,375,” MKS PAMP Group trader Sam Laughlin said.
Crude oil
Oil prices edged up in early trading on Tuesday after US crude broke below $40 per barrel the previous session, but traders said fuel markets continued to be dogged by excess production.
“So far, oil weakness has not had much of an impact (on gold), telling us that investors are more encouraged by the lack of any imminent Fed rate increase,” INTL FCStone analyst Edward Meir said in a note.
Fed rate hike
The Federal Reserve should be cautious on interest rate increases due to lingering risks to the US economy, New York Fed President William Dudley had said on Monday, appearing to signal the chance of a hike by the end of the year was fading.
The Bank of England looks ready to cut interest rates for the first time since 2009 on Thursday, seeking to stop Britain’s vote to leave the European Union from kicking the country into recession.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.62 per cent to 964.03 tonnes on Monday.
Among other precious metals, platinum, which hit a 14-month high of $1,161.20 in the previous session, was down 0.4 per cent at $1,152.49 an ounce.
Palladium rose to a 13-month high of $722.70 an ounce on Monday and was up 0.3 per cent at $715.40. Silver was nearly unchanged at $20.39.