Gold shrugs off gain by dollar, trades steady

Gold prices recovered yesterday from its weekend loss. The metal traded steadily despite the dollar strength that drove bullion 1.7 per cent lower in the previous session, the biggest loss since early February.

Spot gold rose five cent to $1,106.60 an ounce and was trading just above its 30-day moving average. US gold futures for April delivery GCJ0 on the Comex division of the Nymex stood at $1,107.3 versus $1,107.60 at Friday's close.

"Gold was hit pretty hard on Friday as the US dollar strengthened. It depends on where the dollar goes and at the moment the greenback is looking a bit bullish," said Peter McGuire, Managing Director of CWA Global Markets in Sydney.

Markets were subdued with Japanese investors out for a national holiday. An increase in benchmark rates by India's central bank on Friday to tame inflation has also worked to keep gold prices in check. India is the world's largest buyer of gold.

"The increase in Indian interest rates has weighed on gold. The price today is up from its Friday night lows even though the euro is softer versus the dollar," said David Moore, commodities strategist, Commonwealth Bank. "My inclination is that the gold price will end the year lower."

 

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