Gold flat as weaker dollar offsets higher equities
February 22, 2014 - 12:00:00 am
LONDON: Gold steadied yesterday and was on track to end the week little changed as the dollar turned lower after another batch of weak US data, but stronger equities put the brakes on a rally that had taken prices to 3-1/2 month highs.
The metal hit its highest since October 31 on Tuesday at $1,332.10 after last week posting its biggest weekly gain since mid-August at more than four percent.
Prices have taken support from a run of softer-than-expected US data, which led to speculation that the Federal Reserve would slow the tapering of its bullion-friendly stimulus measures.
Yesterday’s data showed that existing home sales fell 5.1 percent in January, compared with a 0.8 percent drop in December.
Spot gold was unchanged at $1,323.01 an ounce by 1525 GMT, while US gold futures for April delivery rose $6.40 an ounce to $1,323.30.
“Falling US interest rates and a weakening of the dollar, are two very important determinants of gold prices,” Natixis analyst Nic Brown said. “Since the beginning of the year, both of these have been helping to push gold higher.
“But once the situation in the US normalises, the economy will continue to improve, the fall in the US interest rates will probably reverse and the dollar will improve.” The dollar fell 0.1 percent against a basket of currencies, but was still on track for its first weekly gain in three weeks.