BULLION LATEST 06/12: Gold remains under pressure despite weaker dollar

The spot gold price was quoted at $1,265.5-1,265.8 per oz as of 11:30am Shanghai time, down by $0.55 from the previous session’s close. Trade has ranged from $1,264.25-1,266.8 so far.

• Spot gold prices inched lower during the early session on Wednesday after falling to a two-month low on Tuesday.
• Spot gold fell to a low of $1,260.95 per oz on Tuesday, its lowest level since October 6.
• This comes as the yellow metal continues to contend with optimism in the United States over progress in tax reform legislation – optimism which has seen the dollar strengthen this week.
• The dollar index was marginally lower during Asian morning trading on Wednesday, standing at 93.29 as of 11:30am Shanghai time. The index had reached a high of 93.49 yesterday, its highest since November 30.
• The upside for the yellow metal was capped after the dollar rose and equities market cheered in response to the US Senate passing its tax reform bill on Sunday. A House-Senate conference committee will now work to resolve the differences between the House and Senate tax bills.
• “Gold continues to struggle as investors become increasingly confident that the Republican tax plan will be approved. This has seen the USD strengthen and US equities rally, which has weaken investor demand for the precious metal,” ANZ Research said on Wednesday.
• “To say that the technical picture for gold this morning is ominous would be an understatement… Gold stopped just shy of the long-term support at $1,260 [per oz] before its unconvincing recovery. A break of this level may be the straw that breaks the camel’s back for structural long positioning and in turn could trigger a rush for the exit door,” Jeffrey Halley, senior market analyst at Oanda, said.

Silver, PGMs

• In the other precious metals, the spot silver price dropped $0.025 to $16.080-16.100 per oz. Platinum gained $1 to $912-917 per oz and palladium was up by $4 to $986-991 per oz.
• On the Shanghai Futures Exchange, gold for June delivery was recently at 275.65 yuan ($41.66) per gram, and the June silver was at 3,793 yuan per kg.

Currency moves and data releases

• The dollar index was down by 0.02% at 93.29 as of 11.30am Shanghai time.
• In other commodities, the Brent crude oil spot price dipped by 0.05% to $62.59 per barrel while the Texas light sweet crude oil spot price weakened by 0.12% to $57.35 as of 10.33am Shanghai time.
• In equities, the Shanghai Composite was down by 0.61% to 3,283.69.
• In data on Tuesday, US data broadly disappointed: the goods and services deficit increased by $3.8 billion to reach $48.7 billion in October; the final services purchasing managers’ index (PMI) missed with a reading of 54.5 in November, compared with an expected reading and previous reading of 55.4 and 54.7 respectively; and the ISM non-manufacturing PMI surprised to the downside with a print of 57.4 – a reading of 59.2 had been expected.
• The economic agenda is fairly light today with mainly the ADP non-farm employment change and crude oil inventories from the US of note.