Gold price under psychological $1,200/oz on dollar strength

Otmane El Rhazi from The Bullion Desk.

The gold price remained under pressure during Tuesday’s early European sessions as dollar strength weighed on sentiment – the greenback was last trading at 1.0687 against the euro.

Spot gold was last at $1,194.80/1,195.60 a $1.10 loss on the previous day’s close.

“The declines were partly on account of a stronger dollar and partly due to a solid rebound in the US stock market, which managed to erase most of Friday’s steep loss,” said INTL FCStone analyst Edward Meir.

“Going forward gold still remains within a broad the $1,185-1,225 range and we feel this will probably be maintained in the lead up to next week’s FOMC meeting,” said MKS Capital.

Greece remains a key driver amid concern that it could exit the Eurozone. Yesterday, news reports stated that the Greek government had ordered local governments to transfer cash holdings to the Bank of Greece.

“Among these payments are likely the monthly salary and pension payments as well as 200 million euros due to be repaid to the IMF on May 1. The report reflects the increasing financial pressure that the Greek government finds itself in without access to financial markets or support funds from creditors,” said Credit Suisse.

Still, should there be further developments in Greece, this could provide an upside for gold, which is used as a safe-haven asset.

“Gold could well spring into action should equities get jittery, or the situation in Greece deteriorates,” FastMarkets analyst William Adams said.

The data agenda remains quiet today, with only German and EU ZEW economic sentiment of note.

Elsewhere, the People’s Bank of China’s over the weekend cut its reserve requirement ratio (RRR) by 19.5 percent to 18.5 percent for the country’s largest banks – the second such move this year.

“Gold shrugged off news of policy easing in China,” HSBC analyst James Steel said. “Bullion’s lacklustre price reaction to the rate cut by the PBoC may be due to the policy easing announcement, which is traditionally price supportive, being offset by disinflation concerns, which are historically price negative

Silver at $15.96/16.01 was little changed from the previous $15.94, while platinum at $1,146/1,151 was unchanged and palladium increased $1 to $772/779.

(Additional reporting by Dalton Barker)

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