The price of gold was pulled away from its five-week low by the slumping equities on Wednesday’s session. The U.S. dollar’s soft finish due to the slipping of oil futures also supported the rise of the yellow metal.
U.S. gold futures edged higher by $2.30 cents, and trades at $1,245.80 an ounce for its August delivery. Spot gold rose as much as 0.23 percent to settle at $1,245.58 an ounce on the day. According to OCBC analyst Barnabas Gan, the bullion was also being lifted by sessions of short-covering after its previous slump.
Still, he added that the likelihood of one more rate hike by the Federal Reserve this 2017 is establishing the non-bullish future of gold prices. In the meantime the future of financial stability and the direction of inflation are currently rising. Concerns regarding the U.S. central bank on how fast it can lift interest rates are also the center of attention.
Interest rate hikes are pushing bond yields higher and strengthens the U.S. dollar. This movement will place gold prices at gunpoint as it will heighten the opportunity cost of owning bullion, which is non-yielding.
The falling of oil futures made investors in Asia worried and dragged down the U.S. dollar index and Treasury yields. ICBC Standard Bank’s Toyo branch manager Yuichi Ikemizu said the slump of the greenback, which supports gold, is unexpectedly lower on the previous trade.
Wang Tao, technical analyst in Reuters, suggested that there are possibilities that spot gold will break resistance level at $1,248 and jump to the next resistance at $1.251 an ounce as it managed to be solid around $1.243. Some analysts are saying the absence of compelling data this week would not support the direction of the precious metal.