Gold Slips On Stronger Dollar

Elias Hubbard
December 5, 2017

Gold prices dipped lower on Monday and remained unchanged on Tuesday morning.

The US dollar rose to a 2-1/2-week high against the yen and also advanced versus other currencies on Monday, boosted after the US Senate approved a tax overhaul on Saturday.

The dollar was up 0.6 percent at 112.935 yen after rising to 112.985, its highest since November 17.

Gold was down $5 at $1277 an ounce.

"Bullion is likely to be sensitive to dollar flows, tracking headlines generated by the Federal Bureau of Investigation probe and any further tax reform related news, as we head toward U.S. Nonfarm Payrolls at the end of the week", MKS PAMP trader Sam Laughlin said in a note.

The dollar rebounded to a two-week high on Monday after taking a brief hit on Friday on news that Michael Flynn, former national security adviser to President Trump, pleaded guilty to lying to the U.S. Federal Bureau of Investigation about his contacts with Russian Federation.

"Currently, gold is still supported by ongoing geopolitical tensions and controversies surrounding Michael Flynn", Sharma said.

For now, the dollar has had a boost from higher US bond yields.

"The latter will likely result in a rate rise and a modest downward pressure on gold, since the rate rise decision is largely priced in by markets", Sharma said.

"There is some broad optimism generated on the USA tax plan's passage through the Senate, but it remains to be seen how much it will translate into higher US interest rates next year", said Christin Tuxen, an FX strategist at Danske Bank.

Spot gold looks neutral in a narrow range of $1,272-$1,277 per ounce, Reuters technicals analyst Wang Tao said.

Other reports by Click Lancashire

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