BULLION LATEST 18/12: Gold price gains capped by stronger US dollar, tax reform plans

The gold price was relatively flat during Asian morning trading on Monday December 18, with gains capped by a stronger US dollar and more certainty over the United States’ tax reform plans.

The spot gold price was recently quoted at $1,254.80-1,255.10 per oz, down by $0.15 as of 11:57am Shanghai time. Trade has ranged from $1,252.85-1,255.75 so far today.

  • Demand for safe haven assets like gold fell as sentiment in risk asset markets was boosted by expectations that US lawmakers could pass a long-awaited tax bill this week, with president Donald Trump possibly making it law by Christmas.
  • “The US dollar index…rallied into the weekend as investors shrugged off worries that the tax reform legislation might not be enacted before the year end. We expect lawmakers to pass the tax bill in the coming days or, at the latest, in the first few weeks of 2018,” Credit Suisse said on Monday.
  • “A move above $1,260 [per oz for gold] will bring the key $1,264 area - previously support, now resistance - into play. A move below $1,240 is needed to put a more bearish view on the commodity,” Chris Beauchamp, market analyst at IG, said last Friday.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.035 to $16.04-16.06 per oz. Platinum increased $4 to $893-898 per oz, while palladium was unchanged at $1,023-$1,028 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was recently at 274 yuan ($41.45) per gram, and the June silver contract was at 3,800 yuan per kg.

Currency moves and data releases

  • The dollar index was down by 0.09% at 93.88 as of 11.53am Shanghai time. The index had reached as high as 94.03 earlier today, the highest since December 13.
  • In other commodities, the Brent crude oil spot price was up 0.22% to $63.36 per barrel as of 11:59am Shanghai time.
  • In equities, the Shanghai Composite was down 0.13% to 3,262.01.
  • In US data from last Friday, the capacity utilization rate coming in at 77.1%, while industrial production ticked up 0.2%. The December Empire State Manufacturing Survey number disappointed with a 18.0 reading, below the forecast of 18.8.
  • The economic agenda is light today, with European Union final CPI and final core CPI and US NAHB housing market index being of particular note.
  • The market will also look to China’s Central Economic Work Conference this week, which will provide insights into China’s economic agenda for next year.
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