TOKYO — Gold prices edged higher today after falling the previous day on the strength of the dollar, with investors keeping a close eye on currency markets for bullion’s near-term direction. The dollar has been the main driver for gold in recent weeks: a firmer dollar typically hurts the precious metal, as it makes dollar-priced gold more expensive for non-dollar holders and dampens interest in bullion as an alternative asset.
A weaker greenback supports gold if investors are selling the US currency to buy other assets including gold. If dollar selling is due to US-related concerns, gold can also benefit from its status as a hedge against risk. “The dollar’s still the main driver behind gold’s movement,” said Adrian Koh, an analyst at Phillip Futures in Singapore.
“Gold’s very much still in a sideways consolidation pattern between $920-$980,” he said, adding that he expected the market to remain in that range until a clearer picture of the US economy emerged. Spot gold (XAU=) rose 0,4% to $945,60 per ounce as of 0300 GMT, compared to New York’s notional close of $941,40. US gold futures for December delivery (GCZ9) were also up 0,4% at $947,00 an ounce, compared with 943,70 an ounce on the COMEX division of the New York Mercantile Exchange.
Traders are looking to consumer confidence, durable goods orders and housing data due this week to gauge the state of the US economy. Koh said traders were looking for housing data for further signs that the housing market may have stabilised. Reflecting a lack of market direction, no new investment was made into the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD), which said its holdings stood steady at 1066,41 tonnes as of Aug. 24.
On Friday, the SPDR holdings rose for the first time since mid-July for their biggest one-day gain since June 1. The yen was broadly firmer on Tuesday as investors took a pause from a recent rush to stocks and higher-yielding currencies, with focus shifting to US data. The dollar was nearly flat against the euro after inching up against the single currency on Monday.
