Gold firm despite dollar strength; political uncertainty supports

By: | Published: March 31, 2017 8:15 AM

Gold prices held firm on Friday amid lingering uncertainty over upcoming elections in Europe and Britain's exit from the European Union, even as the dollar hovered around two-week highs on positive US economic data.

Spot gold was mostly unchanged at ,242.43 per ounce at 0058 GMT, while US gold futures were down 0.3 percent at ,241.3. (Reuters)

Gold prices held firm on Friday amid lingering uncertainty over upcoming elections in Europe and Britain’s exit from the European Union, even as the dollar hovered around two-week highs on positive US economic data. Spot gold was mostly unchanged at $1,242.43 per ounce at 0058 GMT, while US gold futures were down 0.3 percent at $1,241.3. The dollar index was up 0.1 percent at 100.48, near a two-week high of 100.57 hit earlier in the session. US economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost that was partially offset by the largest gain in imports in two years.

Prospects for the US economy have brightened now that fiscal stimulus from Washington appears more likely, so the Federal Reserve will need to keep raising rates and eventually trim its bond portfolio to avoid an overheating, one of the most influential Fed policymakers said on Thursday.

The potential for the rise of the far right in European elections this year, along with British Prime Minister Theresa May formally triggering divorce proceedings from the EU on Wednesday has enhanced gold’s appeal as a safe-haven investment. The European Union will tell Britain on Friday how it aims to negotiate its “orderly withdrawal” from the bloc, limit uncertainties for businesses and pave the way for a close future partnership. SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.14 percent to 832.32 tonnes on Thursday. Argentina’s San Juan province ordered Barrick Gold Corp to suspend some activities at its Veladero mine after a pipe carrying gold-bearing solution ruptured on the leach pad, state-run news agency Telam reported on Thursday. Low interest rates are likely to drive fresh investment in gold this year, potentially pushing prices above $1,400 an ounce despite a well-supplied market, an industry report said on Thursday.

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The European Central Bank needs to stick to its already laid out policy path, several policymakers argued on Thursday, although a top conservative urged them to leave the door open to a more rapid reduction in stimulus. Japan’s core consumer prices rose 0.2 percent in February from a year earlier, government data showed on Friday.

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