Gold prices drop slightly in Dubai to Dh151.25

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Gold prices drop slightly in Dubai to Dh151.25

Gold might continue the downward momentum, experts suggest.

By Reuters

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Published: Wed 29 Mar 2017, 10:11 AM

Last updated: Wed 29 Mar 2017, 12:17 PM

Gold fell on Wednesday in the face of technical resistance and positive economic data that boosted expectations for further US interest rate hikes this year, supporting the dollar and equities markets.
Yesterday, 24k gold was priced at Dh152, the 22k was priced at Dh142.75 in Dubai. The prices dropped slightly to touch Dh151.25 today. 
"A resurgent US dollar, along with higher US yields and equities has taken the momentum out of the gold rally for now," said Jeffrey Halley, senior market analyst at OANDA.
The metal was also under pressure after failing to break through its 200-day moving average at $1,260, Halley said, posting its second consecutive down day in Asia. Spot gold was down 0.3 percent at $1,248.32 per ounce at 0325 GMT. US gold futures slipped 0.6 percent to $1,247.9.
The dollar pulled away from 4-1/2-month lows against a currency basket on Wednesday as solid data backed expectations for more U.S. interest rate hikes this year. Reinforcing rate hike expectations, US consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114 and much higher than 116.1 in February. The March level marked the highest since December 2000.             
US Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to U.S. overnight interest rates this year seemed "about right."            
"Perhaps the expectations of a June rate hike have gone up, given the recent statements from the central bank officials," said Jiang Shu, chief analyst at Shandong Gold Group.
The yellow metal was likely to continue the downward momentum through Wednesday to around the $1,235 an ounce level, he added.
A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.         
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which is considered a gauge of investment demand, reported an outflow of 1.8 tonnes on Tuesday.         
Gold prices could continue to be slightly pressured into the next month or so, especially as the market awaits key economic data from the United States for further clarity on US interest rate hikes, Shu said.
Gold bullion investment will rise for the fourth straight year in 2017 as global political and economic factors are forecast to maintain buying interest, CPM Group said on Tuesday.
In other precious metals, spot silver fell 0.6 percent to $18.04 per ounce. The metal hit $18.24, the highest since March 2, in the previous session. 
Platinum rose 0.6 percent to $952.90 per ounce, while palladium prices were down 0.6 percent to $787.50 an ounce.

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