Gold price could retest $1,200 as dollar remains weaker

Otmane El Rhazi from The Bullion Desk.

The gold price looks poised to retest the psychological $1,200 level on Friday, should the dollar’s weakness hold up going into the weekend.

Spot gold was last seen up just 50 cents on the previous session at $1,193.60/1,194.40 per ounce, but with a weaker dollar and higher oil prices providing all commodities with a small boost this morning.

Should the dollar remain weaker – it was last seen down to 1.0878 against the euro – a retest of $1,200 could well be possible before the market closes.

Other metals were similarly placed, silver was last seen up four cents at $15.87/15.92 per ounce, while platinum was up $3 at $1,134/1,139 per ounce and palladium up $4 at $770/775 per ounce.

“The precious metals have been weak of late, platinum and silver continue to look weak, while palladium and gold found some buying yesterday once the dollar turned lower again,” FastMarkets analyst William Adams said.

Disappointing US data in the previous session continues to overshadow the dollar, weekly unemployment claims, manufacturing data and new home sales missed forecast, though losses were limited by all European PMIs also falling short.

US weekly unemployment claims increased to 295,000 in April, higher than the forecast of 288,000. US new home sales for March, meanwhile, came in at an annual rate of 481,000, which was 11.4 percent below the prior month and missed the 514,000 forecast.

Four month highs in oil prices are providing all commodities with a small boost this morning, reports of further Saudi-led airstrikes on Houthi rebels in Yemen is adding to building sentiment on the market.

Generally though, investors will now be turning their attention to Tuesday, with the Federal Open Market Committee (FOMC) two day meeting due to take place. The market will once again be looking for clues as to when the US may choose to begin normalising monetary policy.

In data to come today the German IFO business climate and durable goods orders out of the US.

Meanwhile eurozone ministers are attending a summit once again today to discuss Greece’s possible default on its debt obligations, but positive headlines thus far have been supportive of the single currency.

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