Gold lost ground on Wednesday as early buying tapered off and the US dollar held steady after recent economic data boosted expectations the Federal Reserve would raise interest rates again in August.
Spot gold fell to $613.80/615.30 an ounce from $617.60/619.10 late in New York, where it rose more than $5 on buying sparked by higher oil prices, a volatile dollar and war between Israel and Hizbollah in Lebanon.
Gold had touched a high of $619.20 an ounce in Asia on slight physical buying, not far from Tuesday's intraday high of $623.25, but met stiff resistance around that level as Tokyo futures reversed gains.
"You can say it is still locked in a range of $605 to $625. I think it's a short-term (range) and actually there's no clear direction," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
In Japan, benchmark gold futures on the Tokyo Commodity Exchange fell 16 yen per gram to 2,337 yen despite gains in New York, reflecting a lack of direction among local investors.
The contract ended 36 yen higher at 2,353 yen per gram the previous day on late short covering. Dealers said some investors were disappointed after gold fell back to around $609 an ounce on Tuesday after failing to touch a previous high around $625. Selling pressure also built up because of a firming dollar.
"Although overnight trading illustrated the market's strong support for spot gold at the $600 mark, strong resistance around the $625 and also $635 mark indicates gold will require a firm catalyst if it is to rise again in the short term back towards the $650 mark," Investec Australia said in a daily report.
"The approaching summer holiday season for US traders may provide, however, an opportunity for gold to break its recent tight trading range as the increasing volatility makes it more susceptible to price drivers," it said.
Some dealers said gold remained within the current $600 to $655 trading range, with tension in the Middle East offering some support. The currency market will also offer leads, they said.
Hizbollah vowed on Wednesday not to accept any "humiliating" conditions for a truce with Israel, as the Israeli killing of four UN observers piled pressure on an international conference in Rome to end the 15-day conflict. The dollar steadied after rallying on US consumer confidence and home sales data. The euro was little changed at $1.2578 after falling half a percent on Tuesday.
Dealers await the Fed's Beige Book survey of economic conditions later on Wednesday and US durable goods orders and second-quarter US growth later in the week.
Platinum fell to $1,212/1,217 an ounce from $1,217/1,222 an ounce in New York. Sister metal palladium was unchanged from New York levels at $310/315 an ounce.
Silver inched down to $10.83/10.93 an ounce from $10.89/10.99 late in New York.
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