Gold Stumbles as Fed Rate Hike Doubts Rise

Precious metals prices slid on Monday morning, dipping below the key threshold of $US1,200. 

Gold had gained last week as investors bet that US interest rate rises will come later than many had expected. Yet some of that momentum has now eased and gold wasn’t able to cling on to the key psychological level. Higher interest rates in the US often lead investors to sell gold. 

“Bullish momentum for gold seems to have stalled around the $US1,205 area after the metal made a strong comeback as optimism regarding a US interest rate hike as early as June drifted away,” FXTM Market Analyst Alex Gurr said. 

Spot gold was down 0.3 per cent at $US1,199.20 a troy ounce in morning European trade. 

Commerzbank also pointed to the fact that speculative investors have reduced their net long positions in gold. “The retreat of this group of investors was no doubt also what put paid to the preceding price rise,” it said. After two weekly rises in a row, speculative financial investors withdrew from gold again in the week to April 14, reducing their net long positions by 14 per cent to 48,000 contracts, it said. 

Commerzbank said the “high religious festival of ‘Akshaya Tritiya’ will be celebrated in India this week, during which a lot of gold is traditionally given as gifts, which should keep gold demand at a high level in the run-up to the festival.” 

via Herald Sun

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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