Gold prices edged up on Wednesday, drawing some support from political uncertainty in the United States before a major central banking conference there this week.
Spot gold was up 0.3 percent to $1,287.83 an ounce at 1414 GMT, after shedding 0.5 percent in the previous session. U.S. gold futures were up 0.2 percent to $1,293.20 per ounce.
“Gold’s kind of hanging in there before this Jackson Hole meeting. It is in a wait-and-see mode but we should have a better idea of direction by the end of this week,” Fawad Razaqzada, a technical analyst at FOREX.com, said.
“There can be an argument made for fa bearish view on gold at this stage. If the dollar were to come back due to short covering and given the rally in U.S. stocks we saw yesterday, the (dollar) buck-denominated and safe haven metal could fall out of favour,” he said.
Markets are turning their focus to a meeting of central bankers in Jackson Hole, Wyoming, later in the week where Federal Reserve Chair Janet Yellen and European Central Bank chief Mario Draghi are set to deliver speeches on the outlook for monetary policy and interest rates.
Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
“Most of the people are now looking for hints from the Jackson Hole meeting between the central bankers,” Mark To, head of research at Hong Kong’s Wing Fung Financial Group, said.
“The most important thing is economic fundamentals … central banks are going to have tightening measures in monetary policies to have normalisation. So I don’t have much higher upward momentum for prices,” To said.
“On the other hand, what has been supporting gold for the last six months or so is the risk aversion,” he said, referring to uncertainty around the Trump administration in particular.
The dollar slipped after U.S. President Donald Trump raised the prospect of a government shutdown as he tries to force through his plans to build the wall along the border with Mexico.
Gold was also buoyed by new U.S. North Korea-related sanctions, targeting Chinese and Russian firms and individuals for supporting Pyongyang’s weapons programmes.
Among other precious metals, silver rose 0.2 percent to $17 an ounce, while platinum was up 0.4 percent to $975.
Source: Reuters UK
