Gold Prices Drift As Defensive Demand Dips, Investor Interest Holds Firm

Gold prices continued to edge lower late in US trading on Monday with a firm dollar maintaining some downward pressure on prices.

The dollar made further gains on Tuesday with USD/JPY testing resistance just above 110.00, although there was selling interest above this level while EUR/USD dipped to below 1.1950 before finding fresh support.

Global bond yields moved higher which also tended to erode support for gold while overall risk appetite held firm with European equities making fresh headway.

There was also relief that there had been no fresh alarms over the North Korean situation.

In this environment, there was a further dip in demand for defensive assets which undermined the yen and Swiss franc as well as gold.

Overall, gold continued to edge lower, although there was still evidence of significant resilience with support below the $1,325 per ounce level.

The latest data also recorded an increase in holdings for SPDR Gold Shares which suggests underlying investor interest is still firm.

The US job-openings data remained strong with the series at a fresh record high of 6.17mn for July from a revised 6.12mn the previous month. The data helped maintain a firm US currency tone, although the dollar was unable to extend gains.

Overall, gold was able to consolidate just above the $1,325 per ounce level late in the European session.

Trends in risk appetite and the dollar will continue to dominate market trends in the short term with some caution likely ahead of Thursday’s US CPI data.

Gold Prices 4-Hour Chart

gold12-09-17

Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.