Gold falls as US dollar climbs higher
Precious metal prices in Dubai inched down on Monday as the US dollar posted new gains against major currencies.
The greenback climbed 0.3 per cent at 106.52 against the Japanese yen, while the euro fell 0.1 per cent at $1.0965. During Asian trading hours, spot gold slipped 0.4 per cent at $1,317.04 an ounce.
The bullion could continue falling this week if the US dollar sustains its positive momentum, and as business sentiment and economic data in the United States have shown some improvement. Another factor crucial to gold’s performance is the upcoming meeting of the US Federal Reserve on July 27, which will provide certainty on Fed’s position on interest rates.
Over the shorter term, gold upside is limited, with the bullion’s next technical support located around $1,300, according to Nevine Pollini, equity analyst at Union Bancaire Privee.
“June unemployment data was strong and other reassuring US macro data could increase the probability of a rate hike for this year and create a more substantial improvement in risk sentiment,” Polini said.
“However, only the next FOMC (Federal Open Market Committee) meeting on 27 July will provide certainty as to the Fed’s intentions. If the dollar keeps gaining strength at the prospect of a more hawkish Fed stance, it could quickly become more of a headwind for gold,” Pollini told.
Karim Merchant, managing director and CEO of Pure Gold Jewellers, said he expects the bullion to move back to $1,200 if the US economy remains upbeat and fears over Brexit start to fade.
“If the US economy continues to show improvement, gold is headed toward the $1,200 mark. Global financial markets seem to have settled after the initial Brexit turmoil,” Merchant told.
