Gold dips below $1,190, dollar direction still key

Otmane El Rhazi from The Bullion Desk.

Gold price fell below $1,900 as supportive data out of US and a stronger dollar weighed on the yellow metal.

Overnight data out of the US showed home sales in March reached their highest annual rate in 18 months, with total existing home sales rising 6.1 percent to 5.19 million units, according to the National Association of Realtors (NAR).

Home sales have increased for six consecutive months and are up 10.4 percent over last year.

The news helped the dollar index push higher, up from 97.96 to end Wednesday at 98.08. The index was last at 98.14.

The break below the psychological $1,200 and 50-day moving average for gold price triggered momentum selling.

The spot gold price was last at $1,188.50 per ounce, up about a dollar from Wednesday’s close. Silver is mostly unchanged at about $15.82 per ounce, consolidating yesterday’s 2.5 percent loss.

“While the overnight fall still leaves gold within ranges of the past month, we expect to see gold prices to resume a downtrend in the near term. Both the macroeconomic environment and the physical market (China and India) remain unsupportive of prices,” said a note from ANZ Bank.

For the day ahead, investors will remain on data watching mode, as well as watch out for further developments out of Greece.

Risk sentiments improved as the European Central Bank approved an emergency liquidity assistance(ELA) cap increase of EUR1.5 billion to EUR75.5 billion ahead of Friday’s Eurogroup meeting.

In terms of economic releases, today will see a step up in pace with PMI reports for April due around the globe. This starts in Asia with manufacturing readings in Japan and China. In the Euro area, the Markit flash manufacturing and service sector PMI’s will be released and we will also see unemployment claims numbers out of the US.

In the other precious metals, the PGMs were both lower, with platinum slipping $3 to last seen at $1,127 and palladium down $2 to $755 per ounce.   

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