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May 22, 2019

Futures & Commodities | Gold | Gold steadies as dollar, stocks pull back; Fed minutes in focus

Jeff Daniels




Reusable: Gold bars 001
Spot gold inched up 0.1% to $1,275.65 per ounce, having fallen to its lowest level since May 3 on Tuesday at $1,268.97.
U.S. gold futures were 0.2% higher at $1,275.40 an ounce.
“Today’s gold move is largely a reflection of a slight weakness in the dollar and lower equity markets supporting prices,” ING analyst Warren Patterson said.
”(However), going forward gold movement will largely be dictated by what happens with the dollar and escalation in trade war between the United States and China.”
The dollar index was down 0.1% after hitting a near one-month peak on Tuesday, boosted by higher U.S. Treasury yields after Washington temporarily eased trade restrictions imposed last week on Chinese telecom equipment firm Huawei.
Global stocks pulled back as relief over the Huawei move evaporated on reports that the White House was considering further sanctions on Chinese video surveillance firm Hikvision.
Gold is now more than 5% below its late February peak of $1,346.73 per ounce.
Markets are looking to the release at 1800 GMT of the minutes of the U.S. Federal Reserve’s latest meeting that might give more clues on the interest rate outlook.
“When the Fed minutes are released there will be a knee-jerk reaction on the dollar, which in turn will impact gold,” said David Govett, head of precious metals at Marex Spectron.
“But in the long-term, the impact will be very little because the statement is expected to be very neutral.”
Earlier this week, Fed Chair Jerome Powell said it would be premature to make a judgment about the impact of trade and tariffs on monetary policy.
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.4% to 739.69 tonnes on Tuesday.
However, holdings have declined nearly 7% so far this year, indicating subdued investor interest in bullion.
On the technical side, spot gold may now test support at $1,264 per ounce, a break below which could open the way towards $1,244, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver was up 0.1% at $14.46 per ounce, while palladium lost 0.9% to $1,307.35.
Platinum slipped 1.3% to $803.10 an ounce, having touched its lowest since Feb. 18 at $800.50 earlier on Wednesday.

Source: CNBC

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