Gold Eases From 7 Week High as USD Gains Traction

Gold steadied below a seven-week high on Tuesday as the dollar regained momentum, although uncertainty about the timing of a U.S. interest rate hike kept bullion above $1,200 an ounce.

Friday’s bleak U.S. non-farm payrolls data fuelled expectations that the Federal Reserve could delay an anticipated rate increase this year, boosting gold’s safe-haven appeal. U.S. jobs posted the slowest growth in more than a year in March.

New York Fed President William Dudley said the timing of the U.S. rate hike, which would be the first in nearly a decade, is unclear and policymakers must watch that the U.S. economy’s surprising recent weakness does not signal a more substantial slowdown.

“We haven’t changed our expectation of a mid-year rate hike but the weak number we had on Friday certainly eschews the risk towards more of a later rather than an earlier hike,” said Victor Thianpiriya, analyst at Australia and New Zealand Bank.

Spot gold was nearly flat at $1,213.11 an ounce at 0631 GMT. It hit a high of $1,224.10 on Monday, its loftiest since Feb. 17.

U.S. gold for June delivery slipped 0.4 percent to $1,213.50 an ounce.

Thianpiriya said he still expects gold to drop to $1,100 by end-June, under pressure from a firmer dollar. A stronger greenback makes dollar-denominated assets such as gold more expensive for holders of other currencies.

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