Gold prices fall in Asia on strong dollar
Gold prices dipped in Asia on Friday with a stronger dollar weighing on demand, but support coming on political risks, including a meeting next week in Floridabetween President Donald Trump and China’s President Xi Jinping as well as elections in France and chances of a far-right government.
Gold for April delivery on the Comex division of the New York Mercantile Exchange fell 0.40% to 1,240.00 a troy ounce. Copper futures fell 0.30% to $2.668 a pound.
China’s semi-official manufacturing PMI rose to 51.8, the China Federation of Logistics & Purchasing (CFLP) said Friday, beating the expected 51.6 level and releasing the figures one day ahead of the normal first of the month release and ahead of the Caixin PMI figures.
Earlier in Japan, household spending for February slumped 3.8% year-on-year, compared to a 1.7% decline seen. On a monthly basis however it rose 2.5%, beating the expected 0.4% rise.
Separately, national core CPI fell 0.2% for February year-on-year as expected, while unemployment dipped to 2.8% from 3.0%. Provisional industrial production for February rose 2.0% month-on-month, beating the expected 1.2% increase.
The dollar rose to a nine-day high against a basket of currencies on Thursday, easing slightly to around 100.40 on Friday in Asia. Gold is priced in greenbacks, making it potentially more expensive for holders of other currencies.
Overnight, gold prices traded lower on Thursday, as a push in the dollar weighed on the yellow metal, after the release of upbeat economic data and continued rate hike chatter from several Fed officials.
Gold prices fell to session lows, and on track to end the week in negative, after the dollar swooped to a nine-day high, buoyed by an upward revision in GDP data and hawkish comments from several Fed officials.
The Commerce Department earlier reported that U.S. gross domestic product grew faster than previously reported in the fourth quarter.
Cleveland Federal Reserve reiterated her hawkish view concerning interest rate hikes Thursday, as she said that “further removal of accommodation via increases in the fed funds rate will be needed” should economic conditions “evolve as anticipated”.
Fed President John Williams, tapered some of his bullish rhetoric on the U.S. economy, after he said even though the economy shows “consistent” and “encouraging” signs, “housing still isn’t quite back”.
Economic uncertainty in Europe, as the date of the French presidential election draws closer and the start of Britain’s departure from the European Union, have largely offset the negative impact a stronger greenback has on dollar denominated assets such as gold.
Meanwhile, cash crunches in India due to the government’s recent demonetization will likely act as a temporary headwind for gold prices in the coming months, according to a report from FocusEconomics Consensus Forecast – Commodities.