Gold hits highest in nearly 7 weeks on struggling dollar
Gold prices hit their highest in almost seven weeks on Monday, boosted by a struggling dollar and U.S. economic data that has cast doubt on whether the Federal Reserve will raise rates again this year.
Spot gold was down 0.1 percent at $1,266.99 an ounce at 0846 GMT from an earlier $1,270.98, its highest since June 14. It is on course for a two percent rise this month. U.S. gold futures fell 0.2 percent to $1,265.90 an ounce.
"Dollar weakness is driving the gold price. It`s not just against the euro, it`s against most major currencies," said Commerzbank analyst Eugen Weinberg. "U.S. politics is a mess and U.S. data has not been inspiring."
A U.S. currency near 13-month lows against a basket of currencies makes dollar-denominated gold cheaper for holders of other currencies, which could mean stronger demand. [FOX/]
Analysts said decelerating wage growth and subdued inflation have weakened the case for another rate rise this year. The Fed has raised rates twice this year.
Hopes that President Donald Trump`s administration will implement tax reforms and economic stimulus in the near future, seen as dollar-positive factors, faded after the U.S. Senate on Friday failed to dismantle Obama care, in another political setback for the president.
"We think that there is more upside on gold," said INTL FCStone analyst Edward Meir in a note. "A combination of a weaker dollar and falling U.S. bond yields should propel the precious metal higher, with North Korea being a wild card."
Japanese Prime Minister Shinzo Abe on Monday agreed with U.S. President Donald Trump on the need for more action on North Korea after Pyongyang fired a second intercontinental ballistic missile on Friday.
However, weak physical demand is expected to limit gold`s gains. Gold prices in India last week recorded the biggest discount in seven months as a rebound in prices curtailed retail demand, while lower premiums in other Asian centres failed to lure customers amid a seasonal slowdown. [Goulash]
On the technical front, upside resistance comes in at $1,275, a Fibonacci retracement level. A break above that could see gold making a move towards the year high above $1,295.
Elsewhere, silver gained 0.3 percent to $16.71 an ounce, palladium rose 1.2 percent to $887.90 an ounce and platinum climbed 0.8 percent to $936.4 per ounce.
"Stronger European auto demand is doing little to help platinum, as the sector seems well supplied," Meier said. Moreover, platinum is struggling with longer-term structural demand issues."
Demand for platinum used in autocatalysts could come under pressure due to a push towards electric cars powered by rechargeable batteries and away from vehicles with internal combustion engines that use diesel.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.