· Gold prices finished higher Tuesday, with a sharply weaker U.S. dollar sending prices for the yellow metal up for a third session in a row to their highest level of the month so far.
· August gold GCQ7, +0.07% climbed $8.20, or 0.7%, to settle at $1,241.90 an ounce—their highest settlement since June 30, according to FactSet data. Silver for September delivery SIU7, +0.07% added 16.9 cents, or 1.1%, at$16.268 an ounce.
· The closely watched measure of the buck, the ICE U.S. Dollar Index DXY, -0.01% was trading down 0.5% at94.632 after a low at 94.476—trading at its weakest levels since at least September. The dollar slump has been attributed to Republican lawmakers pulling a vote on a Senate bill to overhaul the Affordable Care Act, known Obamacare, in favor of plan to repeal the ACA bill and replace it at a later date.
· The stumbles in getting the health-care bill passed have amplified doubts about President Donald Trump’s ability to get passage of a raft of Wall Street-friendly legislations, including tax cuts and other laws that may boost the buck.
· Shakiness in the U.S. unit and diminishing expectations that the Federal Reserve will lift interest rates at a rapid clip, due to a spate of lackluster economic reports, has dealt a lift to gold futures, pushing it above its 200-day moving average at $1,230 an ounce. Traders tend to closely watch trading averages for signs of positive or negative momentum in an asset.
· “Concerns over Donald Trump failing to deliver on his controversial health-care reforms [ complemented] the upside [for gold] as investors sought safe-haven safety,” said Lukman Otunuga, research analyst at FXTM, in a note Tuesday. But the rising “prospects of tighter global monetary policy may dampen the metal’s allure this quarter.”
· Looking ahead, analysts at Citi Research said they are “market-neutral” for the second half of this year, expecting prices to decline to an $1,185-$1,210 an ounce range toward year-end.
· “Hawkish Fedspeak and further FOMC tightening may be the prevailing theme for gold in [the second half of the year],” they said in a recent note. “However. we think there is scope for policy error and for medium-term interest rates to stay low” as U.S. growth of more than 2.5% or a sharp pickup in inflation expectations “remain elusive.”
Reference: Market Watch
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