Gold edges lower as the greenback firms; trade tensions limit downside
BENGALURU — Gold prices edged lower on Monday, pressured by a strong US dollar amid prospects of higher interest rates, while global trade tensions kept the metal buoyed above a sixmonth low hit last week.
Spot gold was down 0.30% at $ 1,264.70 an ounce as of 0624 GMT.
US gold futures for August delivery were 0.30% lower at $1,266.60 per ounce.
“There are specific factors that will actually push the dollar higher, given the trade tensions as well as the booming US economy versus other economies,” said OCBC analyst Barnabas Gan.
“Gold prices are very much influenced by the dollar movement rather than anything else. It’s less of a safe-haven demand into gold but rather a reaction to USD strength.”
US President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20% tariff on all imports of European Union-assembled cars.
Trump also plans to bar many Chinese companies from investing in US technology firms and block additional technology exports to Beijing, Wall Street Journal reported on Sunday.
Global shares fell on escalating trade tensions, while the dollar index against a basket of six major currencies was 0.10% higher at 94.585, having hit its highest since July 2017, at 95.529, late last week.
Gold usually gains from political and economic tensions, but has struggled this time around as the dollar has risen strongly, making the dollar- priced metal costlier for non-US investors.
FIRM OVERHANG
“The overhang of higher US interest rates and dollar continues to hold relatively firm as dealers sell on rally. We need the dollar to weaken significantly to get above $1,282,” said Stephen Innes, APAC trading head at OANDA.
Last week, US Federal Reserve Chairman Jerome Powell said the Fed should continue with a gradual pace of interest rate hikes amid a strong economy to balance its employment and inflation goals.
Higher US interest rates make gold a less attractive investment since it does not bear interest.
Gold prices hit a six- month low last week, weighed down by a firm dollar and as the Fed kept its outlook for higher interest rates.
Meanwhile, speculators trimmed their net long position in COMEX gold to the weakest in two-and-a-half years in the week to June 19, data from the US Commodity Futures Trading Commission showed on Friday.
In other precious metals, silver fell 0.70% to $16.31 an ounce.
Platinum was 0.10% higher at $873.70 per ounce. It touched $851.74, the weakest since February 2016, in the previous session.
Palladium was down 0.60% at $951.22 per ounce. The metal slipped to a seven-week low of $ 947.15 an ounce on Friday. —