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Gold rises on short-covering after falling to four-month low

Reuters  |  NEW YORK/LONDON 

By and Peter Hobson

NEW YORK/LONDON (Reuters) - Gold prices rebounded from a 4-1/2-month low on Wednesday on short-covering as the U.S. dollar came off its 2018 highs and U.S. bond yields sat near multi-year peaks.

Spot gold was 0.2 percent higher at $1,292.19 by 1:39 p.m. ET (1739 GMT), having gone as low as $1,286.20, its weakest since Dec. 27.

U.S. gold futures for June delivery settled up $1.20, or 0.1 percent, at $1,291.50 per ounce.

"A lot of people are trying to cover shorts from the break at the $1,316 level. That was a good area people were betting for the downside," Michael Matousek, at

"Now you want to start taking some profits, because statistically, it looks like it can bounce from the short-term."

Gold prices barely responded to saying it might not attend the unprecedented June 12 summit with the if continues to insist that it unilaterally give up its nuclear weapons. also called off high-level talks with scheduled for Wednesday, blaming U.S.-South Korean military exercises.

But higher 10-year Treasury yields, which stayed near highs hit on Tuesday, capped gold's gains, traders said, as the U.S. dollar came off its highs.

A weaker dollar makes gold less expensive for holders of other currencies, but higher U.S. bond yields make non-yielding bullion less attractive to investors.

Bullion had suffered its biggest single-day loss since November 2016 when it fell 1.7 percent on Tuesday to below the 200-day moving average and the psychologically significant $1,300-an-ounce level.

Gold is likely to fall to $1,275 by the end of June and $1,250 by the end of the year as U.S. yields and the dollar strengthen, said That is below the $1,310-$1,360 range gold has inhabited since January.

"It held up for so long on such a high level. Now you are below $1,300 and the 200-day moving average; people who hold long positions are a little bit nervous," she said.

Technical and momentum indicators suggested that gold could fall to about $1,278, ScotiaMocatta analysts said. Fibonacci support for the was at $1,287, they added.

In other precious metals, silver was up 0.9 percent at $16.37 an ounce after dipping to a two-week low, $16.17.

Platinum eased by 0.4 percent at $889.07 per ounce, while palladium gained 0.4 percent at $986.75, earlier dipping to $883.50, a five-month low.

(Additional reporting by and in Bengaluru; Editing by and Nick Zieminski)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 23:22 IST