After gaining more than 8 percent in 2016, gold extended its strong run into the New Year, pushed higher in 2017's first day of trading on Tuesday on technical buying, despite a stronger dollar. At 0641 GMT, spot gold was up 0.6 percent at $1,158.10 per ounce, while US gold futures rose 0.6 percent to $1,158.50. "A technical rebound is just under way," said Jiang Shu, chief analyst at Shandong Gold Group, after gold slipped in December when solid US economic data gave the Federal Reserve confidence to raise rates for the first time in a year.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. "The market is waiting for (US) non-farm payrolls data due this Friday. If we have lower-than-expected data, it is a good chance for gold to have a strong rebound," Shu said. But looking further ahead, Shu expects US interest rate hikes this year to pressure gold.
"Any rise in the first quarter will be a medium-term technical rebound and not a fundamentally driven long trend rally," Shu said. On Tuesday, the US dollar held on to broad gains, resuming its ascent after last week's brief wobble as the prospect of rising US interest rates this year kept sentiment bullish.
"Gold could reach $1,170 at the most until the non-farm payroll data this week," a Singapore-based technical trader said. The most active COMEX gold futures contract finished 2016 up 7.1 percent as compared to the end of 2015. The dollar index - which measures the greenback against six major rivals - climbed over half a percent. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14 percent to 822.17 tonnes on Friday from Thursday.
Comments
Comments are closed for this article.