Gold edged up on Monday on bargain-hunting after dipping to a seven-week low earlier in the session and as the euro strengthened after pro-EU candidate Emmanuel Macron won the French presidential election. Spot gold rose 0.3 percent to $1,230.64 per ounce as of 0727 GMT, after touching 1,224.86 earlier in the session, its lowest since March 17. U.S. gold futures were also up 0.3 percent at $1,230.80 an ounce.
The euro hit a six-month high against the dollar on Monday after centrist Macron comfortably won the French presidential election, defeating Marine Le Pen, a far-right nationalist who threatened to take France out of the European Union. “Leading into the election, with many polls predicting Macron’s victory, we saw safe-haven buying easing into end of last week.
Confirmation that he is victorious has not resulted in any additional selling,” said ANZ analyst Daniel Hynes. Uncertainties on whether Macron’s new party can get a parliamentary majority in the June legislative elections and a lack of clarity on his ability to deliver policies provided a little support to the bullion prices. “Weak positioning (potentially election positioning) in the precious saw offers take gold lower on the open… however the move was well supported and bids restricted further declines,” said MKS PAMP Group trader Sam Laughlin.
You may like to watch:
Gold last week saw its biggest weekly percentage fall since the week ending Nov. 11, ending 3.2 percent lower. Prices have fallen over 5 percent since hitting a five-month high of $1,295.42 in mid-April. “Gold is still pretty much wanted after last week’s fall… People are happy to buy around this level,” said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.
Spot gold still targets $1,209 per ounce, as suggested by a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao. Meanwhile, the U.S. Labor Department reported on Friday that job growth rebounded sharply in April and the unemployment rate dropped to 4.4 percent, near a 10-year low. This points to a tightening labour market that likely seals the case for an interest rate increase next month despite moderate wage growth.
Higher rates could dent demand for non-interest bearing gold. Hedge funds and other money managers cut their net-long position in COMEX gold for the first time in seven weeks, in the week to May 2, while they reduced their bullish stance in silver to the lowest since January, U.S. government data showed Friday. Spot silver gained 0.1 percent to $16.31 an ounce. Platinum was 0.2 percent higher at $913.49 an ounce, and palladium was steady at $811.25.
(Reporting by Swati Verma in Bengaluru; Editing by Sunil Nair and Christian Schmollinger)