• Gold edged up early on Thursday from a near three-week low hit in the previous session, as Asian stocks fell on a report that US President Donald Trump is being investigated for possible obstruction of justice.
• Spot gold rose 0.2 per cent to $1,263.70 per ounce by 0107 GMT. US gold futures for August delivery fell0.8 per cent to $1,265.90 per ounce.
• Spot gold hit a session low of $1,256.65 on Wednesday, its weakest since May 26 after the US Federal Reserve raised interest rates for the second time in three months.
• US stock futures dipped and Asian shares were on the defensive on Thursday with MSCI's broadest index of Asia-Pacific shares outside Japan dipping 0.3 per cent.
• Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice, the Washington Post had reported on Wednesday, citing unidentified officials.
• The Fed had raised interest rates on Wednesday for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing US economy and strengthening job market.
• However, US consumer prices unexpectedly fell in May and retail sales recorded their biggest drop in 16months, suggesting a softening in domestic demand that could limit the Fed's ability to continue raising interest rates this year.
• Wall Street's top banks brought forward their expectations for when they think the Fed will begin reducing its $4.5-trillion bond portfolio to as early September, and see balance sheet reduction as more of a priority than another interest rate rise, a Reuters poll showed.
• "Although the Fed is saying the data is transitory, the market is struggling to align with this view," said Jeffrey Halley, senior market analyst at OANDA.
• "We are looking for gold to hold support around USD $1,260, with expectations that the recent soft U.S. data and ongoing geopolitical concerns should be supportive," MKS PAMP trader Sam Laughlin said in a note.
• Risk sentiment was hit after Washington Post reported that Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice.
• As long as uneasiness around the Trump government among speculators and investors exists, gold will hold up pretty well, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
"Spot gold was also supported by short-term interest in physical gold in Asia, especially from Shanghai this morning," Halley said.
• Among other precious metals, silver rose 0.5 percent to $16.96 an ounce.
• New York based Citibank has remained neutral on North American gold miners and analysts given the bank’s view that the price of the precious metal will peak in the second quarter.
Citi forecasts gold will average $1,220 an ounce in 2017 and around $1,245 next year.
Citi economists currently expect two more 2017 rate hikes in June and September, with balance-sheet tapering in December. Macro uncertainty could drive significant gold price volatility, the bank noted.
Reference: Reuters
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