Gold hits one-week low although equity markets remain volatile

Otmane El Rhazi from The Bullion Desk.

Gold defied expectations on Wednesday afternoon, slipping further despite volatile trading on global equity markets.

The spot gold price was last at $ 1,124/1,124.50 per ounce, down $19.40 on Tuesday’s close and its lowest in around one week. Trade has ranged from $1,117.9 to $1,146.7 so far.

“Gold’s price performance this week is puzzling,” Commerzbank said. “The continued uncertainty on the financial markets and the dwindling [US] rate hike expectation would generally suggest higher rather than lower gold prices.”

Global equity markets remained under pressure today. China’s latest efforts to prop up the economy failed to stabilise the country’s stock markets – the Shanghai composite index closed 1.3 percent down, its lowest since December, after a volatile trading session.

But stronger US data, which raise the prospects of an interest rate hike by the Federal Reserve, put pressure on the precious metal – durable goods orders month-over-month were up 0.6 percent, above the forecast of -0.4 percent. Additionally, the revised figure was adjusted to an increase of 3.4 percent.

Core durable goods jumped two percent month-on-month, smashing expectations of a 0.3 percent uptick.

Still, the president of the New York Fed said the case for a rate increase in September is “less compelling” given international developments and volatility in financial markets.

In the other precious metals, silver dropped below $14 earlier for the first time since August 2009 – it was last at $14.09/14.13 per ounce, down 59 cents.

Platinum at $977/982 per ounce was unchanged while palladium at $522/527 fell $14.

(Editing by Mark Shaw)

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