Although the dollar has strengthened during the Wednesday, gold has proved to be resilient with some support from a decline in bond yields and uncertainty surrounding US economic policies.
Gold prices moved higher in early US trading on Tuesday with a test of resistance towards $1,190 as the dollar lost ground.
There was a slightly weaker than expected reading for US job openings at 5.52mn for November from a downwardly-revised 5.45mn the previous month. The data suggested a possible slight slowdown in the labour market, although the overall impact was very limited.
The dollar was unable to gain any fresh buying momentum, although losses were also very limited as narrow ranges prevailed with USD/JPY finding strong support on approach to the 115.00 area.
A US rally and firmer tone in US equities triggered a retreat back to below $1,185, but there was solid buying support on dips as stocks retreated late in the session.
Gold edged higher during Wednesday’s Asian session with further evidence of physical demand out of China helping to underpin prices.
The dollar was able to gain further support in Europe on Wednesday with USD/JPY moving back above 116.00, while EUR/USD retreated to test support at 1.0500. US bond yields edged lower, however, with US 10-year yields below 2.40% and gold was able to resist significant selling interest.
There was an important element of uncertainty surrounding US economic policies and caution ahead of Trump’s scheduled press conference later on Wednesday. European equity markets moved higher, however, which did not suggests any significant underlying risk aversion in the market and gold drifted towards $1,187 ahead of the US open.
There are no major economic data releases due during the New York session and markets are likely to take their cue from Trump’s press conference, although there is a possibility that there will be little of substance.
Gold prices will tend to lose ground if there is a strong commitment to fiscal expansion with the risk of choppy trading conditions.