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Gold firms near 11-week high, politics and dollar support

Gold bullion bars and coins.
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Gold bullion bars and coins.

Gold climbed on Monday, nearing its highest level since November, as worries about the political landscape in the United States and Europe reinforced investor interest.

Spot gold was up 0.99 percent at $1,231.84 an ounce — around a level last reached in November. U.S. gold futures for April delivery settled at $1,232.10 an ounce after hitting the highest level since mid-November earlier in the day.

Political uncertainty in the United States has been fueled by President Donald Trump's policies, the most controversial of which is a temporary ban on immigrants from seven mostly Muslim
countries. A U.S. judge put a nationwide block on Trump's order on Friday.

Elections in the Netherlands, France and Germany this year are also adding to jitters.

"The initial euphoria of the Trump presidency seems to be fading and the elections in Europe are making people nervous. The uncertainty does mean upside for prices," said Warren Patterson, commodities strategist at ING. "Since the start of the year we've seen the dollar consistently weaker, but physical demand from (top consumers) China and India is still weak and a negative for gold."

China's net gold imports in December, at 51.51 tons, were down 60 percent from December 2015. Meanwhile, gold demand in India fell 21.2 percent in 2016 from the previous year to 675.5 tons as new rules such as those forcing customers to disclose their tax codes for purchases above 200,000 rupees ($2,967) dampened demand.

The dollar's value against a basket of currencies has fallen nearly 4 percent since Jan. 3.

That is partly because of expectations that the U.S. central bank will wait to see what happens on political and economic fronts after Friday's monthly jobs report showed wages barely rose.

"Gold's solid showing so far this year ... is mostly attributable to a weaker dollar and last week's standoffish Federal Reserve statement with regard to when it would next move on rates," INTL FCStone analyst Edward Meir said in a note. "Geopolitical concerns will now be magnified by the Trump administration's more aggressive tone in the foreign policy arena and trade will also remain a key flash point."


Investor interest in gold can be seen in data from the U.S. Commodity Futures Trading Commission (CFTC), showing speculators raised their net long positions in COMEX gold to the highest in eight weeks in the week to Jan. 31.

Technically, gold needs to close above the 100-day moving average at about $1,220 to gain upward momentum. However, traders say that strong resistance at $1,229, a Fibonacci retracement level, could take several attempts.

Spot silver rose 1.35 percent to $17.69 an ounce while platinum gained 0.77 percent at $1,010.90 and palladium added 3.36 percent to $773.30.