Gold Pares Gain on Positive US Data

Gold pared gains on Thursday after stronger-than-expected U.S. data lifted the dollar and impetus from Chinese buying petered out, but it remained higher after the Federal Reserve indicated this week that it was in no rush to raise interest rates.

The dollar rose against a currency basket as data on U.S. durable goods orders in January beat forecasts, boosting confidence in business activity despite worries of the recent surge in the dollar hurting exports.
 
That weighed on gold, which is priced in the U.S. unit.

Spot gold was up 0.3 percent at $1,207.90 an ounce at 1503 GMT. Earlier it hit a session high of $1,220.00, before retreating as the dollar firmed.

“The market feels a bit top heavy,” MKS head of trading Afshin Nabavi said. “We’ve had good buying of physical gold from the Far East as China opened up after the Lunar Week holiday, but above $1,210-1,212, that stopped.”

Gold prices have fallen around 10 percent over the last year, largely due to the prospect of higher U.S. rates, which would increase the opportunity cost of holding non-yielding bullion, while boosting the dollar.

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