MW: Gold retreats as dollar gains ahead of Christmas
Gold futures were modestly lower in early trade Wednesday, as the dollar rose ahead of Christmas.
February gold was $4, or 0.4%, lower at $1,070.20 an ounce, after ending lower Tuesday, ending two straight sessions of gains. Gold is on pace to end the week 0.7% higher and post a 0.5% gain for the month, despite wrestling with bearish sentiment ahead of the Federal Reserve’s decision last week to raise interest rates for the first time since 2010.
Lukman Otunuga, research analyst at FXTM, said resistance for gold has been around $1,080 an ounce and remains bearish on the metal given its inability to break through that level.
“This precious metal remains fundamentally bearish and the relief rally on Monday may have provided the opportunity for bears to drag prices lower. With US interest rates having increased for the first time in almost a decade, the bears have been provided a foundation to install another round of selling momentum into this yellow metal before the end of the year,” Otunuga said.
The FXTM analyst added that a strong dollar might add to the headwinds for gold and other dollar-denominated metals, making them more expensive for buyers using other currencies. On Wednesday, the ICE U.S. Dollar Index DXY, +0.21% a measure of the buck against a basket of six major currencies, was less than 0.2% higher.
Chintan Karnani, chief market analyst at Insignia Consultants, said gold will only see a big rise “if it manages to break and trade over $1090,” noting that the dollar will be a key driver.
On the data front, a report on U.S. durable-goods orders for November were unchanged from the previous month but better than analysts polled by MarketWatch had forecast. Readings on personal income and spending were about in line with expectations, while inflation showed signs of picking up. The data did little to change momentum for metals.
Economic reports on consumer sentiment and new home sales are set to be released at 10 a.m. Eastern time.
Meanwhile, March silver SIH6, -0.48% shed 6 cents, or 0.4%, to trade at $14.26 an ounce.
In other metals, March high-grade copper HGH6, +0.33% gained a penny, or 0.4%, to trade at $2.12 a pound. Meanwhile, January platinum PLF6, -0.44% lost $4.30, or 0.5%, at $868.70 an ounce, while March palladium PAH6, -0.75% shed $2.20 cents, or 0.4%, at $552.45 an ounce.
