Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

PRECIOUS-Gold dips as stocks rally; palladium scales new peak

Published 2018-12-13, 08:10 a/m
Updated 2018-12-13, 08:10 a/m
© Reuters.  PRECIOUS-Gold dips as stocks rally; palladium scales new peak

© Reuters. PRECIOUS-Gold dips as stocks rally; palladium scales new peak

* ECB President's news conference due at 1330 GMT

* Markets await Dec. 18-19 FOMC meeting

* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl

By Swati Verma

BENGALURU, Dec 13 (Reuters) - Gold fell on Thursday as stock markets gained for a third straight day, but the metal held in a tight range ahead of next week's Federal Open Market Committee meeting when the U.S. central bank is widely expected to raise interest rates.

Meanwhile, palladium touched a fresh record high, trading at a premium to bullion, buoyed by a sustained deficit and hopes of fresh demand from the auto sector.

Spot gold XAU= eased 0.2 percent to $1,242.79 per ounce at 1256 GMT, but was trapped in a $6 range, while U.S. gold futures GCv1 were down 0.2 percent at $1,247.10 per ounce.

"Next week we have the FOMC rate decision, and it has been pretty much priced in that we are going to have a rise. But if we see the Fed hold off that rate hike in the light of rising inflation and other macroeconomic concerns, gold could be boosted by that," said Mitsubishi analyst Jonathan Butler.

Investors' focus will be on how much further the U.S. Federal Reserve might lift rates next year.

"We would have a bit more guidance on that next week when the FOMC meets. But it does seem that the Fed is adjusting from more aggressive rate hikes, three or more, to a somewhat toned down approach," Butler said.

Higher rates make non-yielding bullion less attractive, and tend to boost the dollar, in which gold is priced, making it more expensive for holders of other currencies.

Meanwhile, equity markets rallied on signs of easing trade tensions between the United States and China. MKTS/GLOB

"With equities rebounding this week, gold has fallen slightly out of favour as traders unwound their safe haven bets," said Fawad Razaqzada, an analyst with Forex.com.

Gold's direction in the near term would be determined by moves in the greenback, which could be pressured if the Fed takes a more cautious approach, analysts said.

"Gold's recent breakout above the $1,240 resistance means the path of least resistance is still to the upside and it should get a lift if the dollar were to fall on the back of a dovish Fed," Razaqzada said.

Meanwhile, gold's reaction to the European Central Bank's decision to formally end its 2.6 trillion euro ($2.95 trillion) bond purchase scheme was muted. now turns to ECB President Mario Draghi's news conference at 1330 GMT.

Among other precious metals, spot palladium XPD= was down 0.5 percent at $1,255.90 per ounce, having touched a record high of $1,269.25 earlier in the session.

The autocatalyst metal rose strongly on news that China would be reducing tariffs on U.S. imported autos, raising hopes that the sector would be boosted by additional demand, analysts at ANZ said in a note.

Silver XAG= was down 0.2 percent at $14.71 per ounce, while platinum XPT= was steady at $798.40.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.