Gold on Friday steadied near a 3-1/2 week low touched in the previous session, as investors opted for riskier assets amid a surge in US equities and expectations of an interest rate hike by the Federal Reserve later this month.
Spot gold was flat at $1,274.34 an ounce at 0457 GMT. On Thursday, it fell 0.7 per cent to touch its lowest since November 6 at $1,270.11. The yellow metal is down 1 per cent for the week. US gold futures were nearly unchanged at $1,273.60.
“There is a positive mood in the equity market. The US dollar has been strong too (overall). So, it is not beneficial for investors to invest in the commodity market now,” said Dick Poon, general manager at Heraeus Metals Hong Kong Limited.
“People are focusing on stocks in the short-term and are also awaiting an interest rate hike by the US Federal Reserve.”
Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.
On Wall Street overnight, major indexes marked gains with the S&P 500 SPX hitting a record closing high and the Dow Jones industrial average topping the 24,000 mark for the first time.
“It has been a slow climb up the stairs over the past month, followed by a leap out of the top floor window for (gold) prices to crash,” said Jeffrey Halley, senior market analyst with OANDA.
“It should be of concern to longer-term bulls and underlines the fragile nature of gold's pricing at the moment in the absence of any geopolitical safe-haven factors. With monetary conditions set to tighten next year in many parts of the world, gold may find fewer friends as we head into the last month of the year.”
US tax reform bill
The dollar index, which gauges the greenback against a basket of six major rivals, was down 0.1 per cent as the market endured the wait for a vote on a US tax reform Bill.
Republican tax overhaul
The Republican tax overhaul stalled on a procedural issue as the Senate debated the legislation late into Thursday and adjourned, putting off any votes until Friday morning. It was unclear if a decisive vote on the bill would occur then.
Spot gold may break a support at $1,272 per ounce and fall more towards the next support at $1,263.35, as suggested by a Fibonacci retracement analysis and a wedge, according to Reuters technical analyst Wang Tao.
In other precious metals, silver was little-changed at $16.42 after matching an October 6 low of $16.30 an ounce in the previous session. It was down 3.2 per cent for the week.
Palladium rose 0.3 per cent to $1,009.85 and was up 1.3 per cent for the week. Platinum was down 0.1 per cent at $940.10 an ounce and fell 0.3 per cent for the week.