Gold gives up nine-month peak on profit-taking

Gold prices fell in European trade for the first time in three sessions off nine-month highs on profit-taking while dollar rebounds. 

Now investors await US GDP data for the fourth quarter, expected to provide more clues on the pace of policy tightening in the US.

Gold Prices Today

Gold prices fell 0.6% to $1,925 an ounce, with a session-high at $1,939, after rising 0.3% yesterday, the second profit in a row, with a nine-month high at $1,942 as dollar weakens against a batch of major rivals. 

The Dollar

The dollar index rose over 0.1% away from eight-month lows against a basket of major rivals, pressuring dollar-denominated precious metals. 

Traders continue to shun big positions ahead of US growth data, expected tomorrow and crucial for gauging the pace of policy tightening. 

The Federal Reserve is holding its first policy meeting of the year next week to assess growth and inflation developments and decide on policy, with analysts expecting a reduced 0.25% rate hike. 

Estimates

Markets are awaiting US GDP growth data before taking positions, with weak data forcing the Fed to slow down its pace of policy tightening and boosting gold prices, and vice versa. 

Analysts believe that for gold to reliably pierce the $2,000 levels, dollar has to continue its decline. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 0.28 tones yesterday to a total of 917.34 tones, the highest since December 27.