Gold Weaker as Stocks and USD Rise

Gold fell for a third straight session on Tuesday as the dollar strengthened against a currency basket, and as a rebound in European stock markets undermined the metal’s appeal as a haven from risk.

An early January rally driven by a rout in global equities ran out of steam late last week after gold hit chart resistance at its 100-day moving average at $1,108 an ounce. Gains have been capped by concerns over higher U.S. interest rates.

Spot gold was down 0.68 percent at $1,086.40 an ounce, while U.S. gold futures for February delivery were down $9.50 an ounce at $1,086.70.

The metal has retreated after hitting a two-month high on Friday in a rally driven by a slump in oil prices and world shares on fears over the health of the Chinese economy.

“The Chinese stock market crash and the unease it’s created in the market that the government isn’t able to control the economy the way it wants to has lifted gold prices higher,” Natixis analyst Bernard Dahdah said.

“But generally, (we expect) gold to be below $1,000 this year,” he said. “The market will be focused on what the Fed decides — if the Fed delays a rate hike, the price of gold will benefit, or if the inflation figures improve, we could see gold prices dropping.”

via CNBC

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, he 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 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