Gold dipped 0.5 percent at $1,245.41 an ounce on Thursday as the dollar strengthened, but losses were capped by continuing economic uncertainty around Britain's departure from the European Union and approaching French elections. The potential for the rise of the far right in European elections this year, along with British Prime Minister Theresa May formally triggering divorce proceedings from the EU on Wednesday has served to enhance gold's appeal as a safe-haven investment, negating some of the effects of a strong dollar. The impact of Britain’s divorce from the EU may be limited in near term. So is Scotland’s independence referendum that will not take place until 2018 or 2019. We might see support from the French elections if the first round surprises us by the results being better than expected for (far right leader) Marine Le Pen. Unlike Netherlands, populism forces were far more stronger in France. Several U.S. policymakers said the U.S central bank would keep tightening monetary policy in the rest of this year. The dollar index rose from a four-month low to hold above 100 this week. Boosted by increasing consumer spending, U.S. gross domestic product increased at a 2.1 percent annualized rate instead of the previously reported 1.9 percent pace, reflecting a steady growth path for the world's largest economy, and supporting policymakers’ expectations on interest rates hike. Gold is expected to remain rangebound at highs between $1,220 and $1,260.
Silver fell 0.2 percent to $18.16 an ounce after hitting a four-week high of $18.29. Tracking gold, silver remained at highs. Traders were looking at the result of French election to see whether it could breach above the resistance of $18.5. The U.S. Policymakers’ comments and solid U.S. economy are expected to weigh on precious metals. Uncertainty over President Trump’s economic policy weakened the dollar. But with strong support at 99.2 and bright prospect on U.S. economy, the dollar index is expected to remain solid in near term. We maintain our bullish view on the U.S. currency in the long run. On technical front, silver is expected to turn downward or go sideways in near term, pressured by the resistance of $18.5.

 
Dealing Room, ICBC Beijing Branch
Qin Gang

Note: The information herein is provided for informational purpose only. You are liable for the risk incurred to the investments based on this information provided herein.