Business

Gold weighed down by dollar, equities

LONDON Gold was little changed yesterday, off a near two-week high hit in the previous session and weighed down by a stronger US dollar and European equities.

Spot gold was unchanged at US$1,138.96 (S$1,700) an ounce by the afternoon, after hitting its strongest since Dec 14 at US$1,148.98 on Tuesday.

US gold futures were up US$1.10 to US$1,139.80 an ounce.

"In the short term, we are focused towards support at US$1,100 and a break of this will be very bearish for the metal. As for the upside, we really need to break the level of US$1,170 and US$1,200," said ThinkMarkets' chief market analyst Naeem Aslam.

The metal fell more than 8 per cent last month, as US Treasury yields rose after Mr Donald Trump's election led to speculation that his commitment to infrastructure spending would spur growth.

It then hit a 10-month low on Dec 15 as solid US economic data gave confidence to the Federal Reserve to raise US interest rates for the first time in a year. The central bank has signalled three more increases next year from the previous projection of two.

"Currently there are very strong expectations of more rate hikes next year," said Shandong Gold Group chief analyst Jiang Shu, adding that declining gold prices have had a negative impact on the bullish sentiment in physical gold prices.

CONFIDENCE UP

US consumer confidence shot to its highest in more than 15 years this month as Americans saw more strength ahead in business conditions, stock prices and the job market following the presidential election last month.

The upbeat data helped underscore expectations that the US central bank would raise interest rates at a faster pace next year, which lowers demand for non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

The dollar index was up 0.5 per cent against a basket of six main currencies, as investors awaited the release of US home pending sales for November yesterday.

Reflecting bearish investor sentiment, assets in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.14 per cent to 823.36 tonnes on Tuesday.

Holdings are down about 13 per cent since the US presidential election on Nov 8.

In other news, Shanghai Gold Exchange, the world's biggest physical bullion exchange, said yesterday that it would curb the amount of gold investors can trade at one time, a move analysts said would limit institutional investors' influence on prices.

Silver was down 0.5 per cent at US$15.82 an ounce. The metal rose nearly 1.5 per cent on Tuesday.

Platinum was down 0.3 per cent at US$897.51 and palladium rose 0.9 per cent to US$677.10, after rising over 2 per cent in the previous session. - REUTERS

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