Mubasher: Gold prices stood firm earlier on Monday as an improvement in risk sentiment wiped out the impact of expectations that the US Federal Reserve would place brakes on its multi-year monetary tightening cycle.
At 7:48 am GMT, US gold futures stabilised at $1,282.10 per ounce, as spot gold rose 0.1% to $1,282.20 per ounce.
However, by 8:53 am GMT, gold futures fell 0.37% to $1,277.80 per ounce, spot gold declined 0.23% to 1,279.14 per ounce.
“Dovish signals [from the Fed] have kept dollar strength in check, helping gold […] but on the other hand, we have seen them easing bearish sentiments in equity markets,” Singapore-based Phillip Futures analyst Benjamin Lu told Thomson Reuters.
With less than two weeks ahead of the Fed’s first policy meeting this year, the US central bank officials already left little doubt that they consider a pause on interest rate hikes, at least for a while.
As the global economy slowed down, equities plunged last quarter, and consumer confidence and spending were threatened by a partial US government shutdown, worries mounted among many Fed officials.
“We have seen very positive conditions in US equities and the dollar has also seen a series of positive trades,” Lu said, adding that all these competing factors kept a lid on the safe-haven appeal.
The precious metal climbed over 10% after hitting the lowest bottom since one year and a half in mid-August 2018, mostly driven by turbulence in stock markets and a weaker US dollar.
“On the longer run, we are still very positive on gold on a synchronised slowdown in global economic conditions and geopolitical uncertainties,” Lu added.
Chinese economic growth lost pace at the end of last year, highlighting the need for more stimulus, as Beijing grapples with a trade dispute with Washington.
Moreover, markets are anticipating UK Prime Minister Theresa May’s “Plan B” for Brexit, set to be presented before parliament later on Monday, after her deal saw a major defeat last week.
“Front end volumes have firmed with the recent move lower in spot and participants are looking to play on the long-side amid a number of global risks,” MKS PAMP Group said in a note.
