Gold prices have been correcting recent gains, the pullback tested the break-up level at $1,295 per oz and it gave way, which is a sign of weakness. Stints of haven buying have since given prices some lift, but the gains have not been held on to, which suggests a market that is getting tired of the on-going pomposity but lack of progress over North Korea. In addition, the stronger dollar is proving to be a negative for gold prices.
The week began on a positive note for gold as spot gold prices inched higher during Asian morning trading hours on Tuesday September 26 as investors opted for haven assets amid heightened geopolitical tensions.
North Korean accusations and the Kurdish independence referendum threatening to add even more instability to the Middle East saw investors heading for the gold safe haven trade, shrugging off a stronger US dollar in general overnight thus increasing the demand for the yellow metal.
Concerns also arose on straining relations between the USA and Iran after the latter claimed it successfully launched a missile and over oil supply disruptions after Turkey threatened to close the route for Kurdish shipments in retaliation for holding their independence vote.
However on Wednesday the markets witnessed a u turn as gold prices were pulled down over a strengthening US dollar.
The US dollar strengthened on Wednesday following hawkish comments from US Federal Open Market Committee chairwoman Janet Yellen on Tuesday.
The spot gold price remained below $1,300 per oz during Asian morning trading on Wednesday September 27 and was quoted at $1,295.00-1,295.30 per oz as of 04:33 BST, up just $0.95 on the previous session’s close.
Yellen’s speech was interpreted by markets as hawkish as she noted that it would be “imprudent” to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a December US rate increase.
The week began on a positive note for gold as spot gold prices inched higher during Asian morning trading hours on Tuesday September 26 as investors opted for haven assets amid heightened geopolitical tensions.
North Korean accusations and the Kurdish independence referendum threatening to add even more instability to the Middle East saw investors heading for the gold safe haven trade, shrugging off a stronger US dollar in general overnight thus increasing the demand for the yellow metal.
Concerns also arose on straining relations between the USA and Iran after the latter claimed it successfully launched a missile and over oil supply disruptions after Turkey threatened to close the route for Kurdish shipments in retaliation for holding their independence vote.
However on Wednesday the markets witnessed a u turn as gold prices were pulled down over a strengthening US dollar.
The US dollar strengthened on Wednesday following hawkish comments from US Federal Open Market Committee chairwoman Janet Yellen on Tuesday.
The spot gold price remained below $1,300 per oz during Asian morning trading on Wednesday September 27 and was quoted at $1,295.00-1,295.30 per oz as of 04:33 BST, up just $0.95 on the previous session’s close.
Yellen’s speech was interpreted by markets as hawkish as she noted that it would be “imprudent” to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a December US rate increase.
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