Gold bounces off 5-week lows as stock market rally pauses

Wednesday,   06-Mar-2019   09:02 AM (IST)

Gold held steady on Wednesday after recovering from more than five-week lows in the previous session, drawing support from choppy equities, while a stronger dollar capped gains. Spot gold was flat at $1,286.77 per ounce as of 0123 GMT, after touching its lowest since Jan. 25 at $1,280.70 in the previous session. U.S. gold futures were up about 0.3 percent at $1,287.90 an ounce. Asian stocks clung to tight ranges on Wednesday, as investors awaited fresh directional cues from U.S.-China trade negotiations and a weaker Wall Street finish capped broader gains, while robust U.S. economic data supported the dollar. The dollar against major currencies rose to 97.008, its highest since Feb. 19, in the previous session. Sales of new U.S. single-family homes rose to a seven-month high in December, but November’s outsized jump was revised lower, pointing to continued weakness in the housing market. In a separate report on Tuesday, the Institute for Supply Management (ISM) said its non-manufacturing activity index increased 3.0 points last month. U.S. President Trump will reject any U.S.-China trade deal that is not perfect but that the United States will still keep working on an agreement, U.S. Secretary of State Mike Pompeo said in a media interview. With inflation muted but other risks to the U.S. economy on the rise, the Federal Reserve’s patience on policy is nowhere close to running out, with one previously hawkish central banker on Tuesday signalling he could wait until at least June before touching interest rates again. Talks between British Prime Minister Theresa May’s top government lawyer and European Union negotiators to win concessions from the bloc on Brexit ended with no agreement in Brussels on Tuesday. China sought to shore up its slowing economy through billions of dollars in planned tax cuts and infrastructure spending, with economic growth at its weakest in almost 30 years due to softer domestic demand and a trade war with the United States. Investment bank Goldman Sachs raised its 12-month gold price forecast to $1,450 per troy ounce from $1,425. The Perth Mint’s February sales of gold products fell to the lowest level since June last year, declining more than 37 percent from the previous month, it said on Tuesday. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.76 percent to 766.59 tonnes on Monday.