Gold Prices Dip In Asia Despite Support From A Weaker Dollar

04:45' PM - Tuesday, 09/01/2018

Gold prices fell slightly in Asia on Tuesday even as a weaker dollar offered some support and Japan wages data showed a surprise upside.

Gold futures for February delivery on the Comex division of the New York Mercantile Exchange dipped 0.05% to $1,319.70 a troy ounce. The US dolalr index fell 0.11% to 91.98.

Japan reported average cash earnings for November jumped 0.9%, well above the 0.6% expected and overtime pay soared 2.60% compared to a 0.60% rise seen.

Overnight, gold prices eased from near-four-month highs amid dollar strength as investors remained optimistic on the pace of US monetary policy tightening despite mixed signals from Fed officials.

Atlanta Fed President Raphael Bostic said Monday while he supported the Federal Reserve “slow removal” of monetary policy accommodation, the central bank may not need to raise rates three or four times per year.

Bostic struck a more dovish tone than his San Francisco counterpart Fed Williams, who on Saturday said three rates remained appropriate for 2018 amid expectations that President Donald Trump’s tax reform plans would give the economy a boost.

Despite the prospect of global monetary tightening from the Federal Reserve, Bank of England and Bank of Canada this year, BofA Merrill Lynch said it expects gold prices to rise to $1,350 an ounce by the third quarter of the year.

The Bank of Canada could raise rates as soon as next week, Action Economics said, as a recent swathe of positive data on the labor market may force the central bank’s hand on monetary policy tightening.

Nomura’s George Buckley – who correctly predicted that the Bank of England would hike interest rate in November – said recently that there is room for more rate hikes, estimating the Bank of England would raise rates four times by the end of 2019 to curb inflation, which is running well above target.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

In other precious metal trade, silver futures fell 0.93% to $17.13 a troy ounce, while platinum futures gained 0.11% to $946.30.

Copper fell 0.05% to $3.23, while natural gas rose 0.86% to $2.82. The rise in natural gas comes as a much colder 6-to-10day forecast is supporting the front-end of curve. - investing.com -

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