Gold prices hit their lowest in nearly eight weeks on Tuesday as safe-haven demand ebbed on easing political worries after France's presidential election. Spot gold was steady at $1,226.13 per ounce by 0810 GMT, after touching $1,223.34, its lowest since March 16.
Gold prices hit their lowest in nearly eight weeks on Tuesday as safe-haven demand ebbed on easing political worries after France’s presidential election. Spot gold was steady at $1,226.13 per ounce by 0810 GMT, after touching $1,223.34, its lowest since March 16. The metal tested its 100-day moving average earlier in the session but is holding above that line for the time being. US gold futures dropped 0.1 percent to $1,226.20 an ounce.
“With one of the largest political risk events now cleared, some consolidation is warranted, albeit political uncertainty lingers in Italy and is likely to remain for some time,” UBS analyst Joni Teves said. “Further pressure cannot be ruled out for now, but we expect bargain hunting to emerge and physical buying to strengthen should the market test $1,200, paving the way for a recovery.”
Sunday’s vote in France saw the market favourite, centrist Emmanuel Macron, elected president. “Overall sentiment has been turning from risk aversion to normalized risk tolerance levels, so we can see that demand for gold has been decreasing,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group. Elsewhere, Wall Street’s volatility index , which measures implied volatility of stock options and is often seen as an investor fear gauge, closed at 9.77 on Monday, its lowest since December 1993.
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“The fall of the volatility index further hollows out the safe-haven bid that has underpinned gold for most of 2017. Should volatility remain becalmed, gold may find itself on the losing end of a deeper correction to the downside,” said Jeffrey Halley, senior market analyst at OANDA. The U.S. economy’s weak performance at the start of the year should slow Federal Reserve plans for further rate increases, St. Louis Federal Reserve bank president James Bullard said on Monday.
“Even though there may be some slowdown in economic recovery for a very short time, Fed officials still think that this does not impact the rate hike decision,” To said. Gold, which is priced in dollars, could see demand take a hit from higher rates as it pays no interest. Holdings of SPDR Gold Trust fell 0.14 percent to 851.89 tonnes on Monday. Holdings have fallen over 8 tonnes in the past two weeks. Spot silver was steady at $16.24 an ounce. Platinum fell 0.3 percent to $913.45 and palladium edged up 0.2 percent at $809.25.
(Reporting by Swati Verma in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu)