Equityworld Futures – Gold prices fell in late trade on Friday morning (20/01) as the US dollar and US bond yields surged after strong US economic data and support from Federal Reserve Chairman Janet Yellen on US interest rates higher.
LLG Spot gold prices fell 0.2 percent to $ 1,201.76 an ounce, after dropping 1.1 percent in the previous session, its biggest drop since December 15.
While US gold futures prices fell 0.73 percent at $ 1,203.1 per ounce.
Equityworld Futures | Gold Prices Go Down After US Dollar And Bonds Rise
Employment and housing data were better than expected reinforced the view that the US economy is strong enough to guarantee the level of increase, reversing the fall back recently for the dollar and pushing the yield on 10-year bonds to the highest since January 3.
A strong dollar makes gold more expensive for holders of other currencies.
Higher interest rates also means that bond prices fall and yields rise, making these investments more attractive for those who are looking for safe haven assets. Although gold is such an asset, it does not offer a yield to the investor and there costs money to store and guarantee.
Data released before the speech Yellen showed that US consumer prices rose in December at the fastest pace in 2.5 years, indicating that inflationary pressures may increase.
Investors are also looking forward to the inauguration on Friday, US President-elect Donald Trump, who has promised tax cuts and infrastructure spending with protectionist statement that has increased demand for gold as a safe haven.
Analysts said that gold could wobble signal the end of a rally that has lifted the metal about 8 percent of the lowest mid-December to an eight-week high of $ 1,218.64 on Tuesday.
In other precious metals, silver prices 1.76 percent lower at $ 16.97 per ounce, platinum prices eased by 1.38 percent to $ 958.50 and palladium was essentially flat at $ 748.10.
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