The gold price was marginally lower in the Friday morning premarket in London, with a strong dollar ahead of the US GDP number weighing on sentiment.
Spot gold was last seen at $1,204.50/1,205.20, down $4.90 on the previous session as the dollar remained near its highest since January 26 at 1.1203 against the euro.
The move comes amid mixed inflation data out in the previous session. While US inflation at -0.7 percent was worse than the forecast -0.6 percent, core inflation, which removes volatile elements such as energy, at 0.2 percent was better than predicted thanks to rising house prices.
US GDP figures this afternoon will be widely eyed for pre-weekend movements, a strong reading may see gold retesting $1,200 per ounce.
“Decent” physical demand was seen overnight in Asia, although less than it has been in the last few days, MKS reported.
Chinese demand since returning from its Spring Festival holiday had initially buoyed prices around $1,210 per ounce, however restocking post Lunar New Year is expected to continue to fade.
“The precious metals strode out early yesterday and that looked potentially quite bullish, but then retreated when the stronger US core CPI data came out that strengthened the dollar. So for now, the markets are consolidating and it seems likely they will be driven by the dollar today,” FastMarkets analyst William Adams said.
“That said, gold may well find support today as India’s budget is being announced tomorrow and hopes are running high that the government will relax the import duties on gold,” he added.
Rumours have circulated since the start of the year that India’s central bank might cut the duty on gold, which is currently at 10 percent – perhaps by 2-4 percentage points, according to FastMarkets sources, or even to as low as two percent, according to others.
An import duty cut in one of the two largest consumers in the world may bolster imports and provide support to prices during what is likely to be a turbulent year for the metal.
Today sees a number of announcements which may add some volatility into the currency markets, with German preliminary CPI and US preliminary GDP figures topping the bill.
In data already released, German import prices at -0.8 percent were as expected, while French consumer spending at 0.6 percent beat consensus at -0.3 percent.
In data still to come, the Italian preliminary CPI, and out of the US, the Chicago PMI, pending home sales and the University of Michigan’s consumer sentiment and inflation reports.
In other metals, silver was last seen down 13 cents at $16.43/16.48 per ounce, while platinum was down $4 at $1,168/1,173, as was palladium at $803/808 per ounce.
The post Gold price drops amid fading Chinese demand and stronger dollar appeared first on The Bullion Desk.
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