Gold hits two-month low

Cornelia Mascio
Dicembre 7, 2017

Gold was mostly unchanged in Asian trade on Wednesday after sliding to a two-month low in the previous session, despite a slightly weaker dollar.

Spot gold was steady at $1,266.28 an ounce by 0352 GMT. It marked its lowest since 6 October at $1,260.71 on Tuesday. U.S. gold futures were flat at $1,265.70.

The dollar edged down on Wednesday, as concerns about a possible US government shutdown offset optimism about progress on tax reform legislation. Meanwhile, the Republican-controlled US House of Representatives voted on Monday to go to conference on tax legislation with the Senate, moving Congress another step closer to a final bill.

Gold was pressured by the view, reinforced by a Reuters poll of economists, that the U.S. Federal Reserve is nearly certain to raise interest rates next week.

"Gold stays under pressure in the short run as the market is repricing a little bit more Federal Reserve activity next year and the global economy is sparking an uptrend, earnings coming in well and the value for safe-haven assets like gold is diminishing", said Dominic Schnider at UBS Wealth Management in Hong Kong.

Gold is highly sensitive to rising US rates, as these lift the opportunity cost of holding non-yielding bullion while boosting the dollar.

A possible US government shutdown "should be positive for gold but that could be temporary because no one really expects the default", said Capital Economics commodities economist Simona Gambarini.

Among other precious metals, silver fell 0.8 percent at $15.97 an ounce, after hitting $15.88, its lowest since mid-July.

Silver broke below $16.00 for the first time in 4-1/2 months on follow-through selling from the previous session, said John Lawrence, senior metals trader for Heraeus Precious Metals in NY. Platinum eased 1.4pc to $910.40 an ounce, after touching its lowest since July at $899. Palladium rose 1.2 percent at $994.40 an ounce.

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