BULLION LATEST 19/12: Gold price stays capped by stronger US dollar, awaits US tax reform plans

The gold price remained relatively flat during Asian morning trading on Tuesday December 19 after recovering to above $1,260 per oz on Monday as the market waits for direction from the possible passing of a tax reform bill in the United States.

The spot gold price was quoted at $1,261.65-1,261.95 per oz, up by $0.55 as of 11:49am Shanghai time. Trade has ranged from $1,260.30-1,262.35 so far today.

  • “Everything…will hinge on the passage, or not, of the US tax reform bill this week which will set the tone for the dollar, interest rates and by default gold into the new year. Although gold has climbed over $25 [per oz] from its post sell-off lows, momentum remains weak, and it is vulnerable to any moves higher in the dollar and US yields,” Jeffrey Halley, senior market analyst at Oanda, said.
  • US lawmakers are expected to pass the long-awaited tax bill on Tuesday, with president Donald Trump possibly making it law by Christmas.
  • “Gold’s recovery from last week’s lows continues, with the price now needing to break $1,264 [per oz] to maintain upward progress. However, [last] Friday’s rally in that direction was hit by selling, so it could be a difficult one for the bulls. If the rally falters again it is likely that we will see a return to $1,246 and then $1,240,” Chris Beauchamp, market analyst at IG, said late on Monday.

Silver, PGMs

  • In the other precious metals, the spot silver price was up by $0.008 to $16.115-16.14 per oz. Platinum increased $1 to $907-912 per oz, and palladium rose $3 to $1,020-$1,025 per oz.
  • On the Shanghai Futures Exchange, gold for June delivery was recently at 275.25 yuan ($41.58) per gram, and the June silver contract was at 3,805 yuan per kg.

Currency moves and data releases

  • The dollar index was down by 0.02% at 93.69 as of 11.45am Shanghai time. The index had peaked at 94.03 on Monday, the highest since December 13.
  • In other commodities, the Brent crude oil spot price was up 0.08% to $63.43 per barrel as of 11:45am Shanghai time.
  • In equities, the Shanghai Composite was up 0.53% to 3,285.36.
  • In data from Monday, the EU final CPI and final core CPI for November came in at 1.5% and 0.9% respectively – both in line with expectations. The US NAHB housing market index rose to 74, above forecast of 70 – a reading above 50 indicates a favorable outlook on home sales.
  • Key economic data due later today includes German Ifo business climate and US building permits, current account and housing starts.
  • The market will also look to news coming from China’s Central Economic Work Conference which kicked off on Monday. Conclusions from the closed meetings will provide insights into China’s economic agenda for next year.