Gold prices have barely changed, supported by a wilting US dollar as Italian political risk receded, though the prospect of another rise in US interest rates capped gains.
Spot gold was flat at $US1,292.90 per ounce by 1.34 pm EDT (0334 Tuesday AEST), while US gold futures for August delivery settled down $US2, or 0.2 per cent, at $US1,297.30.
‘The dollar is the No. 1 factor for gold,’ said Marisa Hernandez, senior equity analyst in global metals and mining for Neuberger Berman.
‘In the near-term, while we still have interest rates going up in the US and not necessarily in Europe, the gold price can be range-bound, but if the dollar starts to weaken again then that is a key tailwind for the gold price.’
The metal fell on Friday after stronger-than-expected US payrolls data shored up expectations that the US Federal Reserve would press ahead with another rate hike at its June meeting.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion. They also boost the dollar, in which the metal is priced.
The euro eroded some of last month’s hefty losses to bounce 0.5 per cent against the US dollar as Italy’s political tensions eased.
Equities also strengthened as worries over a potential trade war between the United States and other major economies were overshadowed by a retreat in political risk in Europe and strong US jobs data.
Finance leaders of the closest US allies vented anger over the Trump administration’s metal import tariffs. Gold has struggled to capitalize on the trade stand-off, however, as attention turned to the outlook for US interest rates.
Speculators raised their net long position in COMEX gold contracts to the strongest level since late April in the week to May 29, the US Commodity Futures Trading Commission said.
However, gold-backed exchange-traded funds registered outflows later in the week, suffering the biggest one-day outflow in nearly four months, suggesting that investment appetite was softening.
Meanwhile, silver increased 0.1 per cent to $US16.37 an ounce, while platinum was trading down 0.2 per cent at $US897.25 after earlier hitting a 10-day low of $US894.55.
Palladium lost 0.5 per cent to $US994.47 per ounce, after earlier seeing $US1,010.50, a three-week high.
Money manager short positions, or bets on falling prices, on CME platinum contracts hit record highs in the week to last Tuesday, ING said in a note.
‘Open interest continued to rise as prices fell last week, suggesting the shorting continues, but at these levels we would soon expect some support from short-covering/profit-taking,’ it said.