Gold slumps below $1,180, support for Swiss gold plan wanes

Otmane El Rhazi from The Bullion Desk.

The gold price again failed to hold above $1,200, retreating below the key downside level of $1,180 on fading support for the Swiss gold initiative.

Spot gold was last at $1,178.20/1,179.00 per ounce, down $16 on Tuesday’s close, after a poll showed that public support for the proposal to outlaw further gold sales from the Swiss National Bank, make physical bullion at least 20 percent of its assets and repatriate Swiss-owned gold had fallen to 38 percent from 45 percent.

Later today, the all-important US FOMC meeting minutes could provide guidance on when the US may raise interest rates, which has also swayed precious metals sentiment.

Should the US Federal Reserve, which is largely seen raising rates in mid-2015, adopt a hawkish tone in the minutes in line with the strengthening US economy, the dollar is likely to strengthen and gold’s credentials as a safe-haven asset would be dampened.

Higher interest rates will have a negative effect on the gold market, pushing investors to yield-bearing assets such as equities and bonds.

“[Even though] I really don’t expect [the FOMC] to come out with anything earth shattering, the market will no doubt be nervous ahead of it,” Marex Spectron’s David Govett said.

“I would be more reluctant to take a position today and would rather keep an eye on the dollar for intraday moves. Let’s get the minutes out of the way and then see where we go from there,” he added.

In data already released, the EU current account at 30 billion euros beat the forecast 21.3 billion euros. From the US, housing starts fell 2.8 percent to 1.01 million in October, down from 1.04 million in September, although housing starts at 1.08 million were at a multi-year high and up for the third consecutive month.

Silver followed gold lower, slumping below the $16 level – it was last at $15.94/15.99 per ounce, down 16 cents, while platinum at $1,187/1,192 was $9 lower and palladium at $766/771 was down $3.

(Editing by Mark Shaw)

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