Global gold prices drop

Gold prices fell on Tuesday as renewed expectations of an increase in US interest rates next month pushed the dollar higher, although political and economic uncertainties in Europe and the US supported investor sentiment.
Spot gold was down 0.3 percent at $1,233.79 an ounce at 1541 GMT, but has gained more than 6 percent since the start of the year. US gold futures slipped 0.3 percent to $1,235.2.
The dollar strengthened after Federal Reserve members pointed to the potential for higher US rates next month, making commodities priced in the currency more expensive for non-US buyers.
“Gold is capped by the likelihood that US monetary policy will be tighter at some stage, potentially in March,” Societe Generale analyst Robin Bhar said. “There is a lot of political uncertainty, there are safe-haven flows going into gold.”
Bhar added that gold is also an investment hedge against corrections in what look to be overvalued equities. Investor demand for gold can be seen in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, holdings of which have risen by more than 5 percent to 27.044 million ounces since Jan. 31.
Major US indices — the Dow Jones Industrial Average and the S&P 500 — have hit consecutive record highs in recent days.
“Gold’s resilience is all the more impressive considering US equities are setting record after record, while the dollar is also fairly strong,” INTL FCStone analyst Edward Meir said. Support is down to a “myriad political and economic uncertainties” that lie ahead in 2017, Meir added.
Traders are focused on speeches by a number of Federal Reserve presidents, looking for clues on the timing of US rate rises. Also on the radar is US President Donald Trump’s address to Congress on Feb. 28, which analysts and traders hope will offer detail on infrastructure spending and tax cuts.
Technical support is around the 21-day moving average near $1,221 an ounce, while $1,250 presents a major barrier, analysts say. A break higher will meet Fibonacci resistance at $1,255.
Elsewhere, silver fell 0.2 percent to $17.98 an ounce, platinum lost 0.7 percent to $992.85 and palladium gained 0.1 percent to $772.83.

Source: Arab News