PRECIOUS-Gold hovers near one-week peak on weak consumer sentiment print
Shafaq News/ Gold prices held near a one-week high on Monday, as a plunge in U.S. consumer sentiment allayed some concerns of an early tapering by the Federal Reserve.
Spot gold fell 0.1% to $1,776.78 per ounce by 0342 GMT, having earlier hit its highest since Aug. 6 at $1,782.40. U.S. gold futures were flat at $1,778.50.
“The disappointing consumer sentiment data suggest that the Fed may have more reasons to stay put about tapering asset purchase, and this is definitely good news for gold,” said Margaret Yang, a strategist at DailyFX.
However, “towards the end of year we may see some lower price levels (in gold)... The overall monetary environment is moving towards tightening,” Yang added.
U.S. consumer sentiment dropped sharply in early-August to its lowest level in a decade, as rising cases of Delta variant of the coronavirus threaten to dent the pace of economic recovery.
While markets face a mixed bag of economic data, an increasing number of policymakers have been discussing a quicker timeline for tapering and possibly raising the Fed’s benchmark overnight interest rate.
Gold is considered a hedge against inflation, but it is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar.
Friday’s data weighed on the dollar index dragging it to a one-week low, boosting gold’s appeal to those holding other currencies.
“Expect tough resistance for gold at $1,800,” OCBC said in a note.
“The FOMC (Federal Open Market Committee) minutes is likely to determine gold’s next near-term direction, where a hawkish report may send gold tumbling once more.”
Silver fell 0.2% to $23.70 per ounce. Platinum slipped 1% to $1,016.01 and palladium was down 0.5% at $2,635.71.