BULLION LATEST 09/01: Gold prices stage slight recovery, but firmer dollar caps gains

The spot gold price managed a slight bounce during Asian morning trading session on Tuesday January 9, but expectations of more US interest rate increases this year continue to underpin the dollar, capping any significant gains in the yellow metal.

The spot gold price was recently quoted at $1,318.90-1,319.35 per oz, up by $1.25 from the previous trading day’s close. Trade has ranged from $1,316.23-1,319.55 per oz so far today.

  • Gold prices staged a minor recovery in the early session on Tuesday, with a slightly weaker dollar providing support.
  • The dollar index was at 92.23 as of 10.15am Shanghai time, compared with a reading of 92.05 at roughly the same time on Monday.
  • The index had reached as high as 92.4 on Monday, supported by rising expectations of a March interest rate hike by the US Federal Reserve (Fed).
  • Weakness in the Euro had also lent support to the dollar.
  • “The euro gave back some ground as last week’s disappointing euro area inflation data weighed on short-term sentiment against the backdrop of rising expectations that the Fed will tighten again in March,” ANZ Research noted on Tuesday.
  • “Gold prices edged a bit lower overnight after the US dollar took back some lost ground from the EUR, but as the USD mini-correction ran out of steam, gold prices quickly retraced earlier loses,” Stephen Innes with Oanda said on Tuesday.
  • “Given the very tight current correlation between gold and USD coupled with relatively sparse news flow, bullion dealers will be keying on Fed speak to provide a catalyst for the dollar ahead of Friday’s key US CPI, but so far the Fed rhetoric as contributed few sparks,” Innes added.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.035 at $17.110-17.130 per oz. Platinum declined by $1 to $962-968 per oz, while palladium was increased by $6 to $1102-1107 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was recently at 280.55 yuan ($43.17) per gram, and the June silver was at 3,896 yuan per kg.

Currency moves and data releases

  • The dollar index dipped by 0.1% to 92.23 as of 10.15am Shanghai time.
  • The dollar is in recovery mode, supported by expectations of a March interest rate increase by the US Federal Reserve.
  • In equities, the Shanghai Composite Index was up by 0.08% to 3412.24 as of 11.30 am Shanghai time.
  • In other commodities, the Brent crude oil spot price edged $0.31 higher to $68.17 per barrel as of 11.50am Shanghai time and the Texas light sweet crude oil spot price declined by $0.01 to $62.19 per barrel.
  • The economic agenda is light today with the European Union’s unemployment rate and US data that includes the NFIB small business index, JOLTS job openings and IBD/TIPP economic optimism of note.
  • China’s consumer and producer price indices are also expected early on Wednesday morning.
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