BULLION LATEST 15/12: Gold continues recovery on weaker dollar

Gold prices continued their recovery during Asian morning trading on Friday December 15, with the dollar staying weak after the US Federal Reserve raised interest rates on Thursday.

The spot gold price was recently quoted at $1254.45-1254.75 per oz, up by $1.05 as of 11:34am Shanghai time. Trade has ranged from $1253.15-1255.95 so far today.

  • Gold has found relief from a weaker dollar, allowing for prices to tick higher.
  • The dollar sunk after the Fed raised US interest rates on Wednesday.
  • The policy tightening was accompanied by concerns about low inflation, toning down expectations for policy tightening in 2018, with officials sticking to a projection of three increases next year.
  • The Fed forecast inflation to remain shy of its goal for another year, giving policymakers little reason to accelerate the expected pace of rate increases.
  • The dollar index stood at 93.58 as of 11.50am Shanghai time on Friday, down by 0.05%.
  • “A generally weaker dollar saw gold’s comeback in the last few days continue initially in overnight trading [on Thursday]. However, significantly, the rally fizzled out just ahead of $1,260 [per oz], the long-term breakout that prompted last week’s sell-off. Although technical traders will be happy as gold follows the script, it does represent a significant failure, implying that gold will struggle to maintain rallies,” Jeffrey Halley, senior market analyst at Oanda, said.
  • “After the failure at $1,260, gold fell to $1,253 to close out New York trading with more of a whimper than a roar. It has moved… higher in early Asia as regional buyers load up ahead of the weekend,” Halley added.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.025 to $15.900-15.920 per oz. Platinum was flat at $878-883 per oz, and palladium increased $1 to $1,030-$1,035 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery dipped by 0.07% to 274.05 yuan ($41.44 per gram, while the June silver strengthened by 0.39% to 3,784 yuan per kg.

Currency moves and data releases

  • The dollar index was down by 0.05% at 93.58 as of 11.50am Shanghai time.
  • In other commodities, the Brent crude oil spot price was down by 0.06% to $63.30 per barrel, while the Texas light sweet crude oil spot price increased by 0.12% to $57.14 per barrel.
  • In equities, the Shanghai Composite was down 0.67% to 3,270.23.
  • In data on Thursday, China’s industrial production rose by 6.1% year on year in November, following a 6.2% gain in the prior month while markets expected 6.2%. Meanwhile, retail sales increase by 10.2% from a year earlier in November, after a 10% rise in the previous month, but this was below market expectations of a 10.3% increase.
  • In US data, the flash services and manufacturing purchasing managers’ indices (PMI) came in at 55.0 and 52.4 respectively, with the latter significantly lower than an expected print of 54.8. Business inventories were in line with expectations at 0.1%, while unemployment claims improved to 225,000 from 236,000 a week earlier. Retail sales surprised to the upside with a print of 0.8% (against 0.3% expected) and import prices came in at 0.7%, up from 0.1% previously.
  • The economic agenda is fairly light today with the European Union’s trade balance, the Bank of England’s (BOE) quarterly bulletin and US data that includes the Empire State Manufacturing Index, capacity utilization rate and industrial production.
  • In addition, BOE Monetary Policy Committee member Andrew Haldane is speaking in Italy.
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