· Gold prices edged lower on Wednesday, pressured by stronger equities and a firmer dollar amid speculation over who will be the next U.S. Federal Reserve chief.
Spot gold was down 0.2 percent at $1,273.70 an ounce by 0633 GMT and U.S. gold futures for December delivery were 0.2 percent lower at$1,275.20 per ounce.
· “Gold fell overnight, and continues to point south this morning as market appetite improves on better Wall Street prints amid stronger-than-expected corporate earnings results,” said OCBC analyst Barnabas Gan.
“Moreover, the strengthening dollar on news of rising probability for John Taylor to be the next Fed chair is a key driver for softening gold prices into the week ahead,” Gan said.
· A source familiar with the matter said Trump polled the Republicans on whether they would prefer Stanford University economist Taylor or current Fed Governor Jerome Powell for the job, and more senators preferred Taylor.
· Taylor is seen as a hawkish candidate who would prefer higher interest rates in the United States.
· Market participants are widely anticipating one more interest rate hike this year.
· Spot gold may test a support at $1,271 per ounce, with a good chance of breaking below this level and falling more towards the Oct. 6 low of$1,260.16, Reuters technicals analyst Wang Tao said.
· Meanwhile, investors were also looking ahead to a European Central Bank meeting on Thursday, where the bank is expected to announce a reduction in its monthly bond purchases.
· “Should the central bank surprise with a somewhat more aggressive tightening stance, funds could use the opportunity to liquidate some recent length and provide gold with an element of support,” INTL FCStone analyst Edward Meir said in a note.
· In other precious metals, silver slipped 0.2 percent to $16.90 an ounce.
Reference: Reuters
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