Gold price dips below $1,200 as dollar rebounds

Otmane El Rhazi from The Bullion Desk.

The gold price slipped back below the key psychological level of $1,200 on Friday morning, with a stronger dollar and a fading geopolitical premium weighing on sentiment.

Spot gold was last at $1,197.20/1,198.00 per ounce, down $5 on Thursday’s close – it hit a near-one-month high in that session at $1,119.90.

Other metals reacted similarly – silver was last four cents lower at $16.99/17.04 per ounce, while platinum was down $5 at $1,141/1,146 and palladium fell $7 to $758/764.

“Gold, silver and platinum have had strong rallies while palladium remains subdued,” FastMarkets analyst William Adams said. “We feel the strong rallies have run into profit-taking and some scale-up producer selling – the slight rebound in the dollar is also likely to have created more of a headwind.”

“We will see whether underlying sentiment has become more bullish by seeing how the market handles any price dips,” he added.

Brent crude oil was lower at $58.20 per barrel despite concerns that oil shipments out the Middle East may be affected by the military campaign against the Houthi militia in Yemen launched by Saudi Arabia and several of its regional allies.

Also weighing on the precious metals is a resurging dollar, which has powered to an intraday low of 1.0801 against the euro, having traded at near three-week lows on Thursday around 1.10, after several Federal Reserve officials alluded to the timing of am increase in US interest rates from near-zero levels

Fed policymaker James Bullard suggested that now would be a good time to normalise US monetary policy so that it is “set appropriately for an improving economy over the next two years” and Atlanta Fed president Dennis Lockhart also claimed that the economy is in a solid position for a tightening in monetary policy.

This afternoon’s final GDP figure out of the US, forecast at 2.4 percent, will be monitored for its influence on the near-term direction of the dollar, which had until Friday been gradually retreating on dovish comments from Fed chair Janet Yellen regarding the pace of growth in the world’s largest economy.

Yellen is due to speak this evening on monetary policy at a Federal Reserve conference in San Francisco.

In other data, German import prices at 1.4 percent outperformed expectations at 0.5 percent, while Italian retails sales were as predicted at 0.1 percent.

(Editing by Mark Shaw)

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