Gold edged higher to almost $1,200 per ounce on after the better-than-expected US economic growth data boosted the dollar briefly as the market looked at the Swiss referendum on Central bank gold reserves for more trading cues.
The right-wing Swiss party called the November 30 vote with the aim of preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold around 20% of its assets in gold, in comparison to last month’s 8%.
Reuters quoted James Steel, HSBC analyst as having said, “The impact of a ‘yes’ vote could quickly translate into prices and take gold as much as $50 higher.”
He added, “the bulk of opinion in the market appears to favor a ‘no’ vote and although a rejection of the provision by voters would not be surprise, it could deal a modest psychological blow to the market and help reaffirm the bear trend in prices, but is unlikely to send prices immediately visibly lower.”
Spot gold shot 0.1% at $1,198.76 per ounce, below the $1,207 high of three weeks it had hit on Friday.
The metal dropped 0.3% the previous session with the rally due to the surprise rate cut from China fading.
Traders were awaiting US economic data for cues on the economy’s strength and the impact that it has on the dollar.
Robust economic data might hurt gold as it might prompt the US Federal Reserve to increase interest rates sooner than expected. The bullion is a non-interest-bearing asset.
CNBC quoted Bernard Dahdah, analyst at Natixis as having said, “The polls indicate that a ‘yes’ vote is unlikely… however, if it happens, we could see a short-lived reaction in the price of gold, but it’s not like other central banks will follow, because it wasn’t a central bank decision.”
Platinum rose 1.5% to $1,215.50 per ounce. Silver climbed 1.4% to $16.67 per ounce and palladium rose 0.5% higher to $791.22.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com