Gold dips on profit-taking after rally on concerns over Saudi arrests

Updated: Tue, Nov 07, 2017
10:51 am
Reuters
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Gold inched down on Tuesday after investors sold bullion to lock in profits following the nearly 1 percent gain in the previous session on safe-haven buying on concerns over corruption arrests that targeted royal family members and ministers in Saudi Arabia.

Spot gold was down 0.2 percent at $1,279.62 per ounce at 0415 GMT. The metal jumped nearly 1 percent on Monday in its biggest one-day percentage gain since Sept. 25 and also moved above its 100-day moving average then, typically seen as a bullish signal by technical traders.

U.S. gold futures for December delivery dipped 0.1 percent to $1,280.20 per ounce.

"Saudi Arabia appears to have spooked global markets with the spillover from oil flowing into other markets. Gold has benefited from safe haven flows... Asia has seen some profit taking set in," said Jeffrey Halley, a senior market analyst with OANDA.

"But we question the longevity of the rally. These tend to be short term in nature," he added.

Saudi Arabia`s future king, Crown Prince Mohammed bin Salman, tightened his grip on power through an anti-corruption purge by arresting some members of the kingdom`s political and business elite.

The campaign of mass arrests expanded on Monday after a top entrepreneur was reportedly detained in the biggest anti-corruption purge of the kingdom`s affluent elite in its modern history.

"The situation in Saudi Arabia will bear close watching and will likely be the prime driver for gold," said INTL FCStone analyst Edward Meir in a note.

U.S. President Donald Trump`s visit to South Korea, where the odds are that he will likely visit the Korean demilitarized zone could also provide gold with some support over the next few days, Meir added.

Trump arrived there on Tuesday, the closest he has come to the frontline of the nuclear standoff with North Korea, on a visit that could aggravate tensions with Pyongyang.

Many investors buy gold as an alternative investment during times of political and financial uncertainty.

In the wider markets, Asian shares touched their highest in a decade on Tuesday, while the dollar fell from an eight-month high versus the yen.

Spot gold may end its consolidation within a narrow range of $1,263 to $1,281 per ounce very soon and then either bounce more to $1,299 or fall sharply towards $1,241, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver slipped 0.6 percent to $17.13 an ounce, after hitting its highest since Oct. 20 at $17.27 earlier in the session.

Platinum was down 0.5 percent at $930.10 per ounce, and palladium was slipped 0.2 percent at $998.25 an ounce.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)