Gold Prices Hit Fresh 2-Month Lows as Dollar Strengthens

Gold Prices Hit Fresh 2-Month Lows as Dollar Strengthens”

Gold held within a tight trading range on Thursday as the dollar held firm on strong USA services sector growth, with markets awaiting the key US non-farm payrolls report on Friday. United States and world stocks also rose to new records as a positive global growth outlook encouraged investment in riskier assets.

"Investors will be casting a keen eye on tonight's non-farm payrolls data release, given the relative strength in equities and the dollar, a strong NFP reading could have gold testing the 200 DMA level at $1252", MKS PAMP said in a note.

Spot gold may slide to $1,260 per ounce as it has broken a support at $1,270, according to Reuters technicals analyst Wang Tao.

Having touched its lowest since mid-August on Tuesday, spot gold XAU= was up 0.2 percent at $1,274.41 per ounce by 2:25 p.m. EDT (1825 GMT).

The most active gold contract for December delivery edged down 3.60 USA dollars, or 0.28 percent, to close at 1,273.20 dollars per ounce.

Higher interest rates typically boost the dollar and aid bond yields, adding pressure on dollar-denominated, non-yielding gold. The net long position of hedge funds and money managers in COMEX gold rose nine-fold in the two months to mid-September, helping push prices higher, but has since fallen sharply.

"Even if the dollar index may break over 94, further upside is probably limited, and a consolidation (softer dollar) will likely follow, before strengthening again towards the end of Nov/start of Dec when the market is expecting another rate hike". But ETF holdings tracked by Reuters dropped between Friday and Monday by the most since late July.

Demand for physical gold in India improved slightly this week because of a correction in local prices, but restrictions on the industry and increased smuggling took the sheen off the bullion market heading into the peak festival season. On the technical side, gold was holding around its 100-day moving average at $1,272.

As for other precious metals, silver for December delivery went up 1.4 cents, or 0.08 percent, to close at 16.638 dollars per ounce. Palladium added 1pc to $931.10 after moving last week to a premium over sister metal platinum, which dipped 0.2pc to $910.95.

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