LONDON. — Gold dropped back below key support of $1 200 an ounce yesterday, undermined by a firmer dollar following strong US economic data.
Spot gold was down 0,8 percent at $1 197,25 an ounce at 1400 GMT, while US gold futures shed 0,6 percent to $1 203,90 an ounce.
“Although we have quite a high conviction for higher prices in the medium and long term, we see a little bit of a challenge in the short term as long as the dollar remains strong,” said analyst Carsten Menke at Julius Baer in Zurich.
“You have to be cautious if you want to see higher gold prices, but we believe the bottom is here. From an investment point of view, it’s really about averaging into the market, not just doing it all at once.”
The dollar index gained after US consumer spending increased solidly in July, making gold more expensive for buyers using other currencies. The greenback hit a four-week low of 94,434 on Tuesday. Consumer spending, which accounts for more than two thirds of US economic activity, rose 0,4 percent last month, data on Thursday showed.
Spot gold has been trading within an $8 range over the past two sessions, with investors keenly watching the psychological $1 200 level after the metal broke below that mark and hit a 1-1/2 year low of $1 159,96 early this month.
The greenback’s strength against the yuan was making bullion expensive for buyers in the world’s biggest consumer China on Thursday, traders said.