15/01/2016 08:01 AST
Gold eased on Thursday as buyers cashed in some of the previous session’s gains, but the metal remained underpinned by positive pressure from a drop in stock markets and dollar weakness.
Stocks fell in Europe and Asia on Thursday following steep losses on Wall Street, after volatility in Chinese stocks early in the year battered appetite for risk.
That helped send gold prices to two-month highs at $1,112 last week, but gold trading has since been choppy.
Spot gold was down 0.5 per cent at $1,087.41 an ounce at 1249 GMT, while US gold futures for February delivery were up 50 cents an ounce at $1,087.60.
“Gold should be much, much higher, but there seems to be some kind of selling which is hanging in there around $1,093-85, which is stopping it from going higher,” Afshin Nabavi, head of trading at MKS, said.
“A little bit of it may be producer selling because they don’t want to be caught lower ... (and) it could very well be profit taking.” Benchmark Brent crude futures recovered to rise 1.6 per cent after earlier sliding to their lowest since February 2004 as the prospect of more oil supplies from Iran added to gloom over oversupply and concerns about global economic growth.
Falling oil prices have helped depress longer-term inflation expectations, strength in which can lift gold prices.
Chicago Federal Reserve Bank President Charles Evans said he was nervous about the potential effects of China’s slowdown on the US economy and about the possibility that inflation expectations may be slipping.
The Fed raised US interest rates in December and attention has shifted to how many increases will follow in 2016. Rate hikes typically lower demand for non-interest-paying gold while boosting the dollar.
“We are still somewhat stuck for the time being, with not enough interest or buying to conclusively hold above $1,100, but with few participants wanting to aggressively short the market in the light of current conditions in the stock markets and China,” Marex Spectron said in a note.
“So for the short term, I would look to trade a 1080/1100 range in the absence of any outside news or influences.” The world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, reported a 2.4 tonne rise in its holdings on Wednesday, bringing its total inflow for the year to 11.7 tonnes.
In other precious metals, palladium was down 1 per cent at $480.30 an ounce, silver was down 1 per cent at $13.97 an ounce, and platinum was down 1.3 per cent at $836.75.
Reuters
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