Gold inches lower as US dollar gains strength

The spot gold price inched lower during Asian trading hours on Tuesday as the US dollar continued to gain strength.

Spot gold was last at $1,308.50-1,308.80 per ounce, down $4.20 from Monday’s close. Trading ranged at $1,308.05-1,313.10 so far. 

The US dollar index had climbed on Monday, reaching  as high as 95.95 so far on Tuesday as the British pound dipped after United Kingdom Prime Minister Theresa May said Britain will begin the formal process of leaving the European Union by end March next year.

The index was last at 95.92 on Tuesday, up 0.19 percent from its previous close.

Better-then-expected US data overnight also supported the US dollar. The US final manufacturing PMI for September came in at 51.5, close to expectations of 51.4, and the ISM manufacturing PMI for September surprised at 51.5 – 50.4 was called for.

But ISM manufacturing prices for September and construction spending for August both undershot at -0.7 percent and 53 respectively.

The bounce back in the US manufacturing PMI in September – after an unexpected drop to 49.4 in August – have lifted the odds of a December Fed rate hike, Angus Nicholson, a market analyst at IG, said on Tuesday morning.

Market participants currently see a 62.1 percent chance of a US rate hike in December, according to the CME Group FedWatch Tool.

The lack of Chinese participation due to week-long national day holidays in China will likely keep gold in a consolidation phase this week, MKS Group said on Tuesday morning.

The broker sees key support for the yellow metal at around $1,310, and then $1,300, with major resistance up towards $1,330-1,335.

In equities, the Dow Jones Industrial Average closed 0.3 percent lower at 18,253.85 on Monday on firmer prospects for a December rate hike.

In other commodities, the Brent crude oil spot price fell 0.21 percent to $50.66 per barrel, and the Texas light sweet crude spot price slipped 0.45 percent to $48.54 per barrel recently on Tuesday.

In other precious metals, silver was last at $18.745/18.765, down $0.115. Platinum slipped $1 to $999/1,005, and palladium decreased $1 to $705/713 recently on Tuesday.

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