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Gold steady as investors turn cautious ahead of French polls

Spot gold was down 0.1% at $1,280.01 per ounce, as of 0722 GMT, on track for its first weekly drop in six.

business Updated: Apr 21, 2017 13:09 IST
gold,prices,France election
An employee arranges gold jewellery in the counter as her arm is reflected in the mirror at a gold shop in Wuhan, Hubei province August 25, 2011. The Shanghai Gold Exchange will raise margin requirements for its gold forward contracts for the second time this month to 12 percent starting on Friday, in a move aimed at curbing excessive risk-taking following the rapid rally in gold prices.(Reuters photo)

Gold held steady on Friday, with safe-haven demand remaining intact as investors kept an eye on the upcoming French presidential vote that is seen as too close to call.

Spot gold was down 0.1% at $1,280.01 per ounce, as of 0722 GMT, on track for its first weekly drop in six.

U.S. gold futures slipped 0.2% at $1,281.40.

“I would expect investors to stay on the fence... they would likely be market-watching rather than market-trading ahead of the French elections on Sunday, especially when there is no clarity,” OCBC analyst Barnabas Gan said.

“Into the near term, if the geopolitical tensions intensify, there is a chance that gold prices will reach $1,300 or more.”

A closely-watched Cevipof opinion poll published earlier this week showed frontrunners Emmanuel Macron and Marine Le Pen both losing some momentum ahead of Sunday’s first round, and conservative Francois Fillon and far-left candidate Jean-Luc Melenchon still in contention for the second round run-off.

“Assuming the weekend passes without surprises election-wise, there is potential for a correction on Monday as safe-haven hedges are lightened,” said Jeffrey Halley, senior market analyst, OANDA.

“From a chart perspective, gold appears to have run out of momentum, having made a series of lower highs over the past few days.”

Higher U.S. interest rates could also dent demand for non-interest-paying gold.

On Thursday, Dallas Federal Reserve President Robert Kaplan said that two more interest rate hikes this year remains possible but that the U.S. central bank has the flexibility to wait and see how the economy unfolds.

“Gold struggled to hold this week’s gains as the dollar strengthened and concerns over global risk eased. However, selling was relatively muted, which suggests a period of consolidation is now upon us,” ANZ analysts wrote in a note.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.76% to 854.25 tonnes on Thursday. The outflows follow a 11.8-tonne increase on Wednesday, the biggest one-day inflow since September.

Spot silver declined 0.3% to $17.95, extending losses into the fifth session. Silver has fallen about 3% so far this week.

Platinum slipped 0.7% to $970.90, while palladium rose 0.2% to $798.55, after rising over 3% in the previous session.

First Published: Apr 21, 2017 13:07 IST