Gold recovers slightly but still vulnerable to shocks

Gold edged higher today, supported by a soft dollar, but still remains vulnerable to shocks based on hawkish central bank sentiment and recovering assets such as equities.

The gold price is still hovering around seven-week lows, having been pushed out of the previous price bracket, and touched a low of $1,218.31 yesterday, levels not seen since May 11. Gold futures were not optimistic either at $1,224.10, although it marks an upward change of 0.4%. The dollar index eased, but barely, down 0.1 pct to 96.087.

Bloomberg quoted UBS Group AG analyst Joni Teves, who said in a note: “Gold currently looks vulnerable. Higher yields and market participants [are] digesting a hawkish shift in tone among key central banks of late, while equities stay resilient around all-time highs”.

“Gold keeps giving up ground and the strength of the US dollar is adding to its woes,” said David Madden, market analyst at CMC Markets, in CityAM.

“The metal has been pushing lower for nearly one month now, and today it dropped through the 200-day moving average at $1,235. Gold is now trading at its lowest level since mid-May. The bounce back in global equity markets means traders have adopted a more risk on strategy, and that means weakened demand for gold.”

Despite an overall hawkish tone from some of the world’s central banks, we mentioned previously that the Bank of England are currently less enamoured of rate hikes than peers. However Reuters reported that Gertjan Vlieghe, one of the Bank of England’s interest rate-setters, said yesterday he favoured keeping borrowing costs at their historic low. The bank of England has not engaged in a rate hike in a decade.

In mining news, production has resumed at the Cooke mine of Sibanye Gold in South Africa. Workers were angry at measures undertaken by the company to remove illegal miners, which included banning food in underground operations on account of illegal workers spending weeks underground and stockpiling resources. A “wildcat strike” occurred, which saw 16 miners assaulted. The removal of illegal workers had been ongoing since Tuesday, with 138 arrested.

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-recovers-slightly-but-still-vulnerable-to-shocks-13256/

Posted by on Jul 4 2017. Filed under Gold News, Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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