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Gold bounces off lows hit after Macron’s French election win

Yellow metal edges up from seven-week low hit earlier in the session

Image Credit: AFP
A gold merchant displays gold bars in a jewellery shop in the southern Indian city of Hyderabad. Spot gold rose 0.5 per cent to $1,233.33 per ounce (Dh4,530) by 1004 GMT.
Gulf News

LONDON: Gold prices rose on Monday on bargain-hunting having dipped to a seven-week low earlier as safe-haven demand ebbed away after Emmanuel Macron won the French presidential election, with a similar trend seen in other markets.

Spot gold rose 0.5 per cent to $1,233.33 per ounce by 1004 GMT, after touching 1,224.86 earlier in the session, its lowest level since March 17. The precious metal, seen as a safe haven, fell 3.2 per cent last week, its biggest percentage fall in 25 weeks as polls indicated a landslide for Macron.

US gold futures rose 0.6 per cent to $1,234 (Dh4,532) an ounce.

“The result of (the French) election was pretty well forecast ... Last week we had some sizeable (long) liquidation in gold and physical demand remains pretty good right now ...

I’m not surprised to see gold supported around current levels,” said ICBC Standard Bank analyst Tom Kendall.

The removal of the political risk associated with Macron’s rival Marine Le Pen — who had vowed to take France out of the euro — leaves investors refocusing on the pace of monetary policy normalisation in Europe and the United States.

The European Central Bank is expected to have more room to tighten policy as the euro zone’s economic recovery gathers pace.

In the United States data out Friday showed job growth rebounded sharply in April and the unemployment rate dropped to 4.4 per cent, near a 10-year low, which is seen as reinforcing the case for a US interest rate increase next month.

Higher rates dent demand for non-interest bearing gold. A stronger dollar also makes dollar-priced gold costlier for non-U. S. investors.

“Expectation for a hike is there so its about the tone the Federal Reserve (takes). I’m mildly bearish for the remainder of this quarter, I wouldn’t be surprised to see (gold) test $1,200-$1,180,” said Kendall.

Gold has fallen more than 5 per cent since hitting a five-month high of $1,295.42 in mid-April.

Hedge funds and other money managers cut their net-long position in COMEX gold for the first time in seven weeks, in the week to May 2, while they reduced their bullish stance in silver to the lowest since January, US government data showed on Friday.

Spot silver rose 0.4 per cent to $16.35 an ounce.

Platinum was 0.9 per cent higher at $918.15 an ounce, and palladium was 0.5 per cent higher at $817.90.

— Reuters