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Gold settles higher but firm dollar, data cap gains

AP

Gold closed above $1,285 an ounce on Tuesday after an earlier pause in the dollar rally prompted a break above $1,280 an ounce that triggered chart-based buying, but gains were expected to be limited as optimism grows on the pace of the U.S. economic recovery.

Spot gold hit a session high at $1,290.80 an ounce in early trade as stop orders were triggered on a break of the 200-day moving average just above $1,280. Buy stop orders are automatic orders placed by traders at pre-set levels.

Prices have been rebounding from a two-month low of $1,273.06 which was hit on Aug. 21 on speculation of an eventual increase in U.S. interest rates. They were last trading up 0.6 percent at $1,284, while U.S. gold futures closed $6.30 higher at $1,285.20 an ounce.

Symbol
Name
Price
 
Change
%Change
Volume
GOLD
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GOLD/USD
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SILV/USD
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SILVER
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PALL/USD
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PLAT/USD
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"Overall, it seems that gold is getting back into that range of $1,287 and $1,312 as it is clawing back some of the losses made last week and gaining on the back of technical strength," Mitsubishi analyst Jonathan Butler said.

"But with the dollar likely to remain strong, given the speculation of possible forward guidance from the Fed, and U.S. equities also higher ... I'm not seeing a spectacular rally in gold."

Traders said the metal was likely to remain supported around $1,300 ahead of the expiration of Comex gold options for August later in the day.

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The dollar was flat against a basket of major currencies, pausing after strong gains in the previous week.

Gold's initial gains were, however, capped by strong U.S. data showing consumer confidence rose more than expected in August, climbing to its highest level since October 2007. Separately, orders for long-lasting U.S. manufactured goods posted their biggest gain on record in July.

—By Reuters