The shiny metal dropped today from $955 levels, as the dollar and yen strengthened; dampening demand on gold as safe-haven asset.
Theprevious, gold added $7.40 or 0.78% to close at $955.95 an ounce. Gold Prices were set in London on Friday at $955.50 an ounce, inclining from $950.75 an ounce during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, remained unchanged at 1,061.83 metric tons on August 28.
Gold reached its highest in 3 weeks and witnessed its longest stretch of gains in a month on Friday, in investment demand. However, today the metal is facing strong downside pressure, as the U.S. dollar strengthened and oil fell.
The green currency inclined for the second day, paring some of its losses that had incurred last Thursday. The dollar index, a measure of the dollar's strength against a basket of major currencies, is now at 78.41 compared with Friday's closing at 78.30. After the fall in Asian stocks, especially in China, the Japanese yen and U.S. dollar advanced as refuges. The yen also strengthened versus the 16 major currencies, after the Democratic Party in Japan won the elections the previous day. The incline demand on the U.S. dollar reduced the appeal of the metal as an alternative asset.
On the other hand, oil stopped its last week rally when it hit its highest in 10-month as stocks sagged. Crude oil is now traded at $72.10 a barrel, recording a high of $73.32 and a low of $72.10. Gold failed to took support from oil, which fell causing the metal to lose its role as a hedge against inflation.
In equity markets; U.S. stocks bounced on Friday on optimism with regards to global recovery, after the upbeat data released in the U.S.; Nevertheless, Asian stocks slipped today buoyed by the plummet in Chinese stocks. Nikkei Index dived to the lowest level in 11 months, losing 0.4% to close at 10492.53 points.
Meanwhile, there are fears in markets; boosting demand on lower-yielding assets. Today there is no important economic data from the major economies.
Spot gold is now traded at $953.67 an ounce, recording a high of $960.77 and a low of $953.10. Gold failed to close above the resistance level at $955.61 an ounce, while it may gain support at $951.24.
Among other precious metals; platinum edged down to $1241.50 from $1244.50 at Friday's closing; palladium remained unchanged at $286.50 from $286.50; and silver recoiled to 14.61 from $14.64.