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Gold steadies after biggest fall since 2016

Reuters  |  LONDON 

By Peter Hobson

LONDON (Reuters) - Gold steadied on Wednesday after a surge in the dollar and U.S. bond yields in the previous session had pushed prices down 1.7 percent to their lowest this year.

Tuesday's fall was the biggest since November 2016. Gold crashed below its technically important 200-day moving average and the psychologically significant $1,300 mark to $1,288.31, the weakest since Dec. 28.

"Rising U.S. bond yields and a stronger dollar were factors behind gold's decline below the $1,300 level, said

"The slight pick up (on Wednesday) suggests there might have been some opportunistic buying on the part of investors."

Spot gold was up 0.1 percent at $1,290.86 an ounce at 1104 GMT, while U.S. gold futures for June delivery were flat at $1,290.30.

A stronger dollar hurts gold by making it more expensive for holders of other currencies, while higher bond yields make non-yielding bullion less attractive to investors.

The dollar rose further on Wednesday to a new 2018 high, while yields on 10-year Treasuries slipped back from a 7-year peak.

Yields and the dollar are likely to rise further, pushing gold to $1,275 by the end of June and $1,250 by year end, below the $1,310-$1,360 range it has inhabited since January, said

"Gold 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 gold could fall to around $1,278, said analysts at ScotiaMocatta. Fibonacci support for the was at $1,287, they said.

Investors largely disregarded that had called off high level talks with due on Wednesday, less than a month before a planned summit between and U.S.

"There are lot of geopolitical risks but people are just used to it. Therefore it has not become a big for gold," said

In other precious metals, silver was up 0.2 percent at $16.26 an ounce after falling 1.6 percent on Tuesday.

Platinum was 0.3 percent higher $895.70 an ounce and palladium lost 0.2 percent to $980.72 an ounce.

(Additional reporting by and in Bengaluru. Editing by Jane Merriman)

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

First Published: Wed, May 16 2018. 17:09 IST