April 4, 2017 / 6:41 PM / 4 months ago

PRECIOUS-Gold up, but Trump infrastructure talk knocks it off one-month high

4 Min Read

    * Higher dollar seen as headwind for U.S. economy
    * Gold tests 200-day moving average, around $1,259

 (New throughout, updates prices and market activity, adds
second byline and NEW YORK dateline)
    By Devika  Krishna Kumar and Pratima Desai
    NEW YORK/LONDON, April 4 (Reuters) - Gold prices rose on
Tuesday, hitting a one-month high as the dollar weakened, but
gold retraced gains as U.S. President Donald Trump laid out
aggressive plans for infrastructure spending and deregulation.
    Gold touched $1,261.15, its highest since Feb. 27 as the
dollar weakened after the U.S. Institute for Supply Management
said its index of national factory activity fell in March, while
automakers reported a drop in U.S. sales.             
            . A falling dollar makes gold cheaper for holders of
other currencies.
    Gold retreated from its session high after Trump said his
administration was working on changes to bank regulations and
his proposed infrastructure bill "may" top $1 trillion.
    Spot gold        was up 0.2 percent at $1,255.2 an ounce by
2:01 EDT (1801 GMT). U.S. gold futures         ended the session
0.4 percent higher at $1,258.4.
    "Gold is ... again trading at the technically important
200-day moving average," Commerzbank said in a note. 
    "Gold has been profiting not only from the weak U.S. vehicle
sales figures in March, which have weighed on sentiment among
market participants, but also from falling stock markets and
lower bond yields."
    Yet investors remained cautious ahead of a meeting between
U.S. and Chinese leaders, as well as the upcoming French
presidential election.
    The blast in a St Petersburg train carriage on Monday that
killed 14 people and wounded 50 has fueled security concerns
around the world, triggering interest in gold seen as a safe
place to park assets during times of uncertainty.             
    Investor interest can be seen in holdings of SPDR Gold Trust
     , the world's largest gold-backed exchange-traded fund,
which climbed 0.53 percent to 836.77 tonnes on Monday from
832.32 tonnes on Friday.          
    "We view the reacceleration of inflows into physical gold
ETFs as a positive sign fundamentally, and believe that we will
continue to see inflows due to geopolitical concerns,
persistence of low real rates globally, and growing U.S.
inflation expectations," RBC Dominion Securities said in a note.
    "However, we remain cautious going into Q2 2017, which is
typically weaker from a seasonality perspective, and have seen
technical resistance this year as gold approaches the $1,260/oz
level." 
    On the technical front, gold needs to close above the
200-day moving average, currently around $1,259, to gather
momentum for $1,263.80, the Feb. 27 peak, chart analysts said.
    Spot silver        rose 0.3 percent to $18.27, having hit a
one-month high at $18.412 an ounce.
    Platinum        gained 0.9 percent to $960.3 and palladium
added 0.5 percent to $806.7.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
editing by Dale Hudson and David Gregorio)
  

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