Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Gold dips to 2-week low as risk sentiment improves, yields gain

Published 2019-09-09, 01:51 p/m
© Reuters. Gold dips to 2-week low as risk sentiment improves, yields gain
XAU/USD
-
XAG/USD
-
GC
-
SI
-
PA
-
PL
-
DXY
-

* Break below $1,497/oz could trigger fall to $1,453 -technicals

* Speculators raise bullish COMEX gold, silver bets -CFTC

* Silver falls to lowest in nearly two weeks

By Asha Sistla

Sept 9 (Reuters) - Gold fell to an over two-week low on Monday, briefly breaking below the key $1,500 support, as renewed risk appetite and gaining U.S. yields outweighed support for bullion from expectations for interest rate reductions by top central banks.

Spot gold XAU= fell 0.2% to $1,503.56 per ounce at 1:36 p.m. EDT (1736 GMT). The metal touched $1,497.30, its lowest since Aug. 23.

U.S. gold futures GCv1 settled down 0.3% to $1,511.10.

Higher U.S. Treasury yields and a "bit of a renewed risk appetite" are weighing on gold, said Bart Melek, head of commodity strategies at TD Securities in Toronto.

"Gold positions are extremely long right now so its not particularly surprising that we're seeing some profit-taking and extension of short exposures right now. ... The market got a little bit ahead and it's paring back that attitude."

Speculators increased their bullish positions in COMEX gold and silver contracts in the week to Sept. 3, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. CFTC/

U.S. Treasury yields rose while stock markets gained on expectations that global central banks will launch stimulus measures to support their economies. US/ MKTS/GLOB

Risk sentiment was also lifted on Friday after China said it would slash the amount of cash that banks must hold as reserves, while U.S. Federal Reserve Chair Jerome Powell said the central bank would continue to "act as appropriate" to sustain economic expansion. see a high chance of a quarter percentage point cut to interest rates in the Fed's September policy meeting FEDWATCH . The European Central Bank is also expected to cut rates later this week.

On the flip side, analysts said the lower interest rates would keep gold supported.

Lower interest rates decreases the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Meanwhile, the dollar .DXY eased against a basket of major currencies. USD/

"Across the world, you have so much negative rates, which is a big catalyst for gold and that's not going away anytime soon," said Michael Matousek, head trader at U.S. Global Investors.

Spot gold is expected to test technical support at $1,497 per ounce. A break below that could cause a further fall to $1,453, according to Reuters technical analyst Wang Tao. XAG= shed 0.5% to $18.08 per ounce, after falling to a near two-week low of $17.89 in the session.

Palladium XPD= was up 0.4% at $1,542.95 per ounce after hitting $1,562.27, while platinum XPT= remained unchanged at $949.81.

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.