The gold price dipped briefly below the $1,200 mark this morning during Asian trading, as the dollar strength continue to weigh on the yellow metal and investors consider the impact of India holding import duties at 10 percent.
Spot gold was last at $1,200.70 per ounce, down $6 from Monday’s close – it hit a one-week high at $1,223.40 on Monday.
“Gold retreated in the face of a stronger dollar and the increase of US interest rates,” said a report from Commerzbank.
Overnight, there were the release of various econoomic data out of US, but final manufacturing PMI outperformed the expected 54.3 at 55.1. The dollar index made a new record high at 95.52, with analysts expecting more weakness in the euro to extend as the European Central Bank starts to implement quantitative easing.
“As US-euro interest rate spreads widen further in the dollar’s favor, central banks will have an increasing incentive to be the major counterparts to the ECB’s bond buying, consequently switching to increased US dollar reserve holdings and adding to the downward pressure on the euro,” said a report from Credit Suisse.
In other gold-related news, India’s finance minister delivered his budget speech over the weekend with several new measures introduced for gold products. However, he kept the import duties at 10 percent, disappointing investors which could hope for a release of pent-up demand in India.
“The impact of the gold bond and gold deposit scheme should eventually reduce India’s imported gold demand. It is fair to say however that the government plans are long-term in nature and the near temr impact is likely to be tame,” said analyst James Steel from HSBC Securities.
In the other precious metals, silver slipped 18 cents to $16.22 per ounce, platinum is $5 lower to $1,179 and palladium fell $4 to $820 per ounce.
The post Gold hovers around $1,200; dollar strength pressures appeared first on The Bullion Desk.
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