Gold eases from record highs on firmer US dollar, profit-taking
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GOLD prices dipped more than 1 per cent on Friday (Jul 19), as the US dollar firmed and some investors locked in profits following the metal’s recent surge on increasing expectations of US interest-rate cuts in September.
Spot gold was down 1.4 per cent to US$2,411.78 per ounce by 1025 GMT. Bullion hit an all-time high of US$2,483.60 on Wednesday.
US gold futures fell 1.7 per cent to US$2,414.70.
The dollar inched 0.2 per cent higher, while benchmark 10-year Treasury yields also climbed, putting pressure on bullion.
“It appears to be a combination of factors, including a stronger dollar, rising US yields, easing geopolitical tensions, and potential profit-taking, all contributing to gold’s weakness ahead of the weekend,” said Zain Vawda, market analyst at MarketPulse by Oanda.
“If prices close below US$2400 today, reaching US$2500 in the near-term could prove challenging.”
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Markets see a 98 per cent chance of a rate cut by the US Federal Reserve in September, according to the CME FedWatch Tool. Non-yielding bullion’s appeal tends to shine in a low-interest rate environment.
Earlier this week, Fed Chair Jerome Powell said recent inflation readings “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.
“In the near term, I expect gold to remain supported above US$2,400,” said Ricardo Evangelista, senior analyst at ActivTrades.
If US gross domestic product data due next week shows a slowdown in economic activity, gold could return to or hover around the record high it hit on Wednesday, Evangelista added.
Another factor that could influence gold is traders’ belief that US presidential candidate Donald Trump will win the November polls, and the more protectionist global affairs and trade stance that could come with that, according to Evangelista.
“This is very positive for the dollar and it affects gold, of course,” he said.
Spot silver fell 2.9 per cent to US$29.19 per ounce and platinum eased 0.8 per cent to US$959.66, while palladium lost 0.7 per cent to US$922.96. All three metals were headed for weekly declines. REUTERS
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