Gold prices edged lower for the fifth straight session on Thursday as the dollar was bolstered by minutes of the last US Federal Reserve meeting that showed policymakers backed further interest rate hikes. "The high interest rate environment would be key driver that would drive gold prices lower," said OCBC analyst Barnabas Gan.
"Since gold remains a zero yielding asset, higher interest rate environment could stimulate risk appetite and yield-chasing behaviour," said Gan, whose year-end outlook for gold is at $1,100. Spot gold was down 0.2 at $1,321.38 an ounce at 0822 GMT, after touching an over one week low of $1,320.61 earlier in the session. The precious metal has fallen about 2 percent so far this week.
US gold futures were down 0.6 percent at $1,324.30 per ounce. Spot gold is expected to test a support at $1,316 per ounce, a break below which could cause a loss to the next support at $1,303, according to Reuters technical analyst, Wang Tao.
"The key level of $1,360 an ounce is likely to keep prices capped and act as a supply zone," said Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Securities Ltd.
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