Gold prices slumped on Monday, January 22, as the dollar regained strength after slipping earlier on a U.S.
government shutdown, with investors on wait-and-watch mode.
Spot gold fell 0.1 percent to $1,329.75 an ounce by 0715 GMT. Spot gold fell 0.5 percent last week, its first weekly decline in six weeks. U.S. gold futures were down 0.3 percent at $1,329.30.
Funding for federal agencies ran out at midnight on Friday, and was not renewed amid a dispute between U.S. President Donald Trump and Democrats over immigration.
Republican and Democratic leaders of the U.S. Senate held talks on Sunday seeking to break an impasse that has kept the U.S. government shut down for two days, but it was unclear if a deal could be struck to reopen federal agencies by the start of the work week.
“U.S. shutdown should not affect gold too much … it’s a political issue more than an economic one,” a Hong Kong-based bullion trader said.
“Physical demand is almost non-existent since early this year and that’s a matter of worry. We need some sell-off before physical demand will come back in.”
The dollar index , which measures the greenback against a basket of currencies, was up 0.1 percent at 90.626, after falling as much as 0.5 percent to 90.155. “While the shutdown of government services in the U.S. is not expected to last too long, traders are getting increasingly nervous about its impact on the economy,” ANZ analysts said in a note.
“Another strong week on equity markets is also starting to raise concerns about stretched valuations, which are also pushing some investors into the gold sector.”
Holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, rose 0.70 percent to 846.67 tonnes on Friday from Thursday.
SPDR holdings rose over 2 percent last week, their best week since week-ending Sept. 3.
Adding a touch of bullishness to gold was data from the U.S. Commodity Futures Trading Commission (CFTC), which showed that hedge funds and money managers had raised their net long position in COMEX gold contracts in the week to Jan. 16,
Spot gold may revisit its Jan. 18 low of $1,323.70 per ounce, as suggested by its wave pattern and a Fibonacci
retracement analysis, according to Reuters technical analyst Wang Tao.
Among other precious metals, spot silver was down 0.2 percent to $16.97. Platinum was mostly unchanged at $1,012, after touching its highest since Sept. 8 at $1,015.20 on Friday. Palladium was up 0.1 percent at $1,106 an ounce.
It touched record highs last week at $1,138. Flows of palladium out of UK stocks to Hong Kong are picking
up as demand from Asian industry grows, pointing to a tightening market that could keep record-high prices on the boil.
