Gold loses steam over higher dollar index

By Onome Amuge

Gold lost its bullish direction as prices of the precious metal stumbled from a near seven-month peak, pressured by a firm  dollar, while investors traded cautiously as they awaited the US jobs data that could influence the Federal Reserve’s rate-hike move.

Spot gold  shed 0.3 per cent at $1,848.59 an ounce in Thursday morning session, despite hitting the highest level since June 13 in the previous session. US gold futures also traded in a bearish region, losing 0.3 per cent to $1,854.10 an ounce.

Commenting on gold’s see-saw motion, Ole Hansen, head of commodity strategy at Saxo Bank said the market was trying to work out the reason behind the initial moves in gold at the start of the year.

Hansen noted that conviction among traders tends to be a bit low at this time of the year. He added that the yellow metal was seeing some profit-taking after it reached $1,865 levels in previous sessions.

The dollar also added pressure on gold prices as the index rose 0.1 per cent. According to market data, a stronger dollar makes gold more expensive for buyers holding other currencies, hence its impact on gold prices.

Market focus is now centred on the US Labour Department’s nonfarm payrolls data to be released on Friday.

Commenting on the next point of price expectation, Brian Lan, managing director at Singapore-based dealer,GoldSilver Central, said:

“If the jobs data reflects that the rate hikes have taken a toll on the economy, then the dollar might weaken further and benefit gold.”

Meanwhile, prices of other precious metals were mixed as spot silver lost 1.1 per cent to $23.49 per ounce, platinum was up 0.1 per cent to $1,077.62 per ounce,while palladium rose 0.4% per cent to $1,795.88 per ounce.