Gold Rises As Dollar Loses Traction

Gold rose on Wednesday as the dollar retreated from earlier highs, but overall sentiment stayed with the bears as outflows from bullion funds showed no sign of slowing.

Market participants were also digesting news that Swiss regulator FINMA said it found a “clear attempt” to manipulate precious metals benchmarks during its investigation into precious metals and FX trading at UBS.

 
Holdings in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund, fell 0.12 percent to 724.46 tonnes on Tuesday – a six-year low.

The figures marked the fund’s sixth straight day of outflows. The ETF is seen as a good reflection of market sentiment due to the size of its holdings.

“The overall backdrop is still negative with the dollar tilting towards strength and continued ETF outflows due to continued rises in U.S. stock markets,” Commerzbank analyst Carsten Fritsch said.

He added that subdued physical demand in Asia and a weak technical picture were also darkening the outlook.

Spot gold was up 0.3 percent at $1,167.60 an ounce by 1339 GMT, after gaining 1.2 percent on Tuesday.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza