The gold price was steady around the $1,185 levels after the US dollar retreated following disappointing US home sales data overnight.
Data out overnight showed total existing home sales at 4.88 million were short of the forecast 4.91 million, albeit up from the previous month’s 4.82 million. New home sales data is due later today alongside manufacturing data – these will be closed watched for any signs of improvement that may reignite speculation for higher interest rates from June.
Spot gold price was last seen at $1,185.60, about $4 lower than Monday’s close. Prices are seen consolidating around this level although analysts say price movement will largely depend on how the dollar performs.
“Gold’s rally has taken place in the context of short-term dollar weakness in an environment that should, in the longer-term, see more upside for the greenback,” said IG market’s analyst Chris Beauchamp.
The dollar pared Friday’s gains to retreat to 1.0930 against the euro on Monday – the US currency had been softening before home sales data fell short of the annual rate of five million units for the second consecutive month, pushing the greenback to an intraday low of 1.0945. The dollar was last seen at 1.0912 against the euro.
“The bullion market may focus on the upcoming release of US CPI data on 24 March, especially if the data show an increase in deflationary pressures, we believe. The gold rally looks intact and we believe the market is firm, but it is close to running into upside resistance at the $1,200 per ounce, a clear psychological level,” said James Steel, analyst at HSBC Securities.
For the other precious metals, silver which came close to $17 on Monday fell 13 cents to the current $16.86 per ounce. Platinum is $7 lower at $1,140 while palladium is also $6 lower at $770.
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