The gold price is set to retest the key psychological $1,200 per ounce mark during Friday morning London trading, shrugging off near-two year highs in the dollar.
Spot gold was last seen at $1,198.80/1,199.50 per ounce, up $2.80 on Thursday’s close, with the metal trading within a $5 intraday range thus far.
“The precious metals experienced a stronger pullback earlier in the week, but generally they are not holding up badly and the fact we are seeing some strength at the same time as the dollar is strengthening again bodes well,” FastMarkets analyst William Adams said.
Near-two year highs in the dollar at 1.2270 against the euro is weighing on sentiment, although largely gold appears to be ignoring the gains.
A close above $1,200 per ounce heading into the weekend could be notable considering the changing stance of the US Fed on the prospective interest rate hike next year.
Trading today is expected to remain subdued however, in light of few macroeconomic announcements and as the year-end holiday season approaches.
“There comes a time in December when it becomes clear that the time for Christmas holidays is upon us,” Marex Spectron’s David Govett said earlier this week.
“Do not buy strength or sell weakness in this market at the moment. When it looks good, sell it, when it looks awful, buy it, otherwise leave it alone,” he added.
In wider markets, equities appeared to like the fact the Fed was not in a hurry to raise rates – the Euro Stoxx 50 surged 3.3 percent yesterday and the Dow closed up 2.4 percent. The stronger tone has flowed through Asia where the Nikkei has closed up 2.39 percent and the Hang Seng up 1.25 percent,
Given so much bullish energy in equities in the past 48 hours, the precious metals have managed to hold up well as stronger equity markets tend to increase the cost of holding precious metals.
The data agenda is fairly light today. Earlier, Japanese all industries activity disappointed at -0.1 percent. GfK German consumer sentiment was close to expectations at 9, while the country’s PPI was positive at 0.0 percent and the eurozone’s current account fell short at $20.5 billion.
Traders will also be looking to the physical markets for any signs of activity, as premiums in the world’s top two consumers continue to fall to around $2 per ounce over spot respectively.
Physically delivered metal on the Shanghai Gold Exchange (SGE) improved last week, despite falling to 38 tonnes in the first week of the month. According to the SGE figures, 50 tonnes of gold were physically delivered from the week beginning December 8, ten tonnes over the year-to-date average and 12 tonnes up from the week before.
In the other metals, silver at $15.93/15.98, up 12 cents, is back below the psychological $16 mark with the metal trading within a 14 cent intraday range so far.
Platinum meanwhile at $1,196/1,201 is up $3, while palladium is up $2 at $790/795 per ounce.
(Editing by Kathleen Retourne)
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