Gold has pared this year’s rally as Asian stocks reached an eight-month high and the dollar strengthened.
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Spot gold fell as much as 1.4 per cent to $US1,313.26 an ounce earlier and was down 1.05 per cent at $US1,317.80 by 2.42 pm EDT (0442 Thursday AEST).
Spot silver fell 0.6% for a 2.8% loss this week, heading for the biggest weekly decline since May 20.
Gold prices fell on Friday, reflecting tension between a global backdrop of easier interest rates and the chance of USA monetary policy being tightened before the end of the year.
The US Federal Reserve would wait until the fourth quarter before raising interest rates, probably in December after the presidential election, a Reuters poll found. The consensus is that the ECB will leave interest rates on hold, while President Mario Draghi is expected to hint at further stimulus as soon as September to offset the hit to the economy from Britain’s decision to leave the European Union. It left the door open to more policy stimulus, highlighting “great” uncertainty and abundant risks to the economic outlook. “The possibility of more easing from the European Central Bank is supportive (for gold), as is current Fed policy”, HSBC analyst James Steel said in a note.
Gold may retest support at $1,313 – technicals * Fed not seen raising interest rates before Q4 – Reuters poll (Updates prices) By Vijaykumar Vedala and Sethuraman N R BENGALURU, July 22 (Reuters) – Gold fell on Friday as investors cashed in profits following a 1.2 percent gain in the previous session on improving demand for the metal on signs US and European central banks will continue loose monetary policies in the medium term.
The unexpected outcome of the United Kingdom referendum sent gold prices soaring, as investors fretted over the economic and political consequences of a Brexit. At times of ultra-loose monetary policies, investors tend to move their investments into gold as a hedge against depreciating currencies.
The Gold has fallen significantly today, has reached fresh new lows, could drop even lower if the United States dollar will continue the upward movement, the greenback is pushed higher by the USDX’s increase, the gold has lost the bearish momentum and now is seeking for strong support to stop the downward movement.
US gold was up 0.1 percent at $1,333.30 an ounce. Platinum fell 0.7% and palladium retreated 0.6%, with the latter heading for a fifth straight week of gains. It dipped 0.4% to $679.60.
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Among other precious metals, spot silver, having ended lower in the four previous sessions, was up 0.1 pct to $19.91 an ounce.
