Monday, July 28, 2014
Gold slipped on Monday due to a stronger dollar but was supported near $1,300 an ounce as its safe-haven appeal rose due to heightened tensions between the West and Russia, and violence in the Middle East.
Trading during Asian hours was thin as investors were eyeing the Federal Reserve's policy meet and major U.S. data releases later in the week to gauge the strength of the economy and the outlook for the central bank's monetary policy.
Spot gold dipped 0.2 percent to $1,304.60 per ounce by 0632 GMT, largely holding the previous session's 1.1 percent gain. The metal logged its second consecutive weekly drop on Friday on strong U.S. economic data.
"Gold is still seeing some safe-haven interest but is under pressure today because of the dollar," said a trader in Sydney. "The key test will be later in the week when we get jobs data and possible comments from the Fed on U.S. interest rates.
" A string of recent strong economic data has increased speculation that the Fed will hike interest rates sooner than expected.
The U.S. dollar hovered near six-month highs against a basket of major currencies early on Monday, holding on to solid gains made last week.
A stronger greenback pressures dollar-denominated gold as the metal becomes more expensive for holders of other currencies.
Gold, seen as an alternative investment, was also sold as Asian stocks shrugged off a drop in Wall Street and hovered near three-year highs on Monday.
Bullion investors were closely watching developments in the Middle East and Ukraine for signs of worsening tensions that could bid up its safe-haven appeal.
Fighting subsided in Gaza on Sunday after Hamas Islamist militants said they backed a 24-hour humanitarian truce but there was no sign of any comprehensive deal to end fighting with Israel.
Fierce clashes between Ukrainian troops and pro-Russian rebels continued on Sunday as Europe and the United States prepared economic sanctions on Russia over the conflict.
"Gold will likely enjoy a measure of stability at least in the early part of the week on account of the deteriorating situation with Russia and the expected stiffer round of sanctions being contemplated by the Europeans," INTL FCStone analyst Edward Meir said in a note.
But the slew of U.S. numbers later in the week that are likely to be good should boost equities and hurt gold prices, Meir said.
That's all for now.