Gold inches lower on profit-taking, US dollar rebound

The spot gold price inched lower on profit-taking and a recovery in the US dollar during Asian trading hours on Friday.

Spot gold was last at $1,335.40-1,335.70 per ounce, down $1.45 from Thursday’s close. Trading ranged at $1,334.75-1,338.05 so far. The spot gold price had surged to a fresh two-week high of $1,343.73 on Thursday.

The spot gold price is likely to see some early profit taking in the metals from Asia given the higher prices and that there was decent regional buying at $1,310-1,320 area last week and early this week, MKS Group said on Friday morning.

The US dollar index has come under pressure after the US Federal Open Committee (FOMC) kept the Federal Funds rate unchanged on Wednesday.

The index dipped as low as 95.05 on Thursday – the lowest since September 12 – but has rebounded 0.15 percent to 95.51 so far on Friday.

At a post-meeting press conference on Wednesday, Federal Reserve chairwoman Janet Yellen acknowledged the stronger case for a rate hike at this meeting but noted that it was reasonable to wait to see more progress towards its objective. 

Yellen appears to be setting the market up for the likelihood of a December hike, subject to a still growing economy, stable markets and overseas developments, National Australia Bank said.

The prospect of a US rate rise in December may cap the upside for gold, Andy Farida, an analyst at FastMarkets, said.

“Failure to clear resistance at $1,355 would leave gold’s technical structure looking rather toppish and vulnerable to further weakness,” he said.

“If that is the case, we feel that gold may have a difficult trading quarter ahead while its technical and fundamental aspects shift in favour of deeper retracement rather than a mild pullback.”

In US data released Thursday, US weekly unemployment claims for September 8-15 at 252,000 were below the forecast of 261,000.

Existing home sales in August came in at 5.33 million, below the economic consensus of 5.45 million. CB leading index month-over-month in August dipped to -0.2 percent, while the estimate expected no change.

Lastly, HPI month-over-month in July rose to 0.5 percent, besting the projection of 0.3 percent. 

French, German and EU flash manufacturing and services PMI, as well as US flash manufacturing PMI are due later.

In equities, the Shanghai Composite decreased 0.17 percent to 3,037.02 recently.

In other commodities, the Brent crude oil spot price fell 0.41 percent to $47.25 per barrel, and the Texas light sweet crude spot price slipped 0.28 percent to $45.78 recently on Friday.

In other precious metals, silver was last at $19.75/19.77, down $0.09. Platinum rose $3 to $1,052/1,058, and palladium gained $1 to $687/695 recently on Friday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 288.25 yuan per gram, and the December silver was flat at 4,397 yuan per kilogram.

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