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Gold stable, dollar key to price direction
The precious metals complex traded in thin volumes in subdued trading on Tuesday while US traders were absent for a one-day holiday but the gold price managed to eke out some gains due to the lower dollar.
With little frontline data out yesterday, the market has lacked cues for directional trades.
Data remains relatively light for the US on Wednesday – only September wholesale inventories and trade sales are due – but the data calendar is set to get busy towards the end of the week, with an update on the state of US demand via several manufacturing-focused datasets.
Spot gold found some lift yesterday from a combination of short covering and a stronger euro, driving prices up $7 to end the day at $1,162.10 per ounce. It was last at a little-changed $1,162.90, although the dollar has picked up on a weaker yen.
News that Japan’s Prime Minister Shinzo Abe might call for a snap election next month pressured the yen lower but lifted Japanese equities after it raised the likelihood that Tokyo will postpone a second increase in the sales tax that was due to take place in October next year.
In other news, the US Mint said it will look to resume the sale of silver bullion Eagle coins next Monday after it sold out following the huge slump in silver price. Silver has dropped close to 20 percent to current lows either side of $15 from around $20 earlier this year
“Retail investor buying has picked up – there has been a rush to buy silver bars and coins – but key is what will be needed to prompt short-covering,” FastMarkets research analyst Tom Moore said.
Spot silver was lower this morning, slipping some seven cents to $15.65 per ounce.
“The market is being hammered lower by deleveraging, it seems. We suspect the market has overshot on the downside. Anything that prompts a correction in the dollar or safe-haven buying in gold may well prompt short-covering by the funds, which could lead to a sharp rebound,” Moore added.
The other precious metals are modestly lower this morning, with platinum losing $3 to $1,199 per ounce and palladium down $4 at $768.
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