Gold hits more than six-month low as the greenback, equities recover

NEW YORK/LONDON — Gold hit its lowest in over six months on Tuesday as a sell-off in global risk assets eased and the metal remained under pressure from the prospect that rising US interest rates will further support the dollar.

Modest gains from Europe’s main bourses relieved nervy investors after the latest escalation in a global trade dispute pummeled Wall Street and sent China into bear market territory.

Rising equities tend to weigh on gold, which is widely seen as a safe-haven asset compared with higher-risk stocks.

Spot gold dropped 0.60% at $1,257.53 per ounce by 1:34 p.m. EDT (1734 GMT), having hit its weakest since mid-December at $1,254.16.

US gold futures for August delivery settled down $9, or 0.70%, at $1,259.90 per ounce.

The dollar rose against its rivals as the escalating concerns of a trade conflict between the world’s two biggest economies pushed markets to unwind their bets in high-yielding currencies.

A stronger dollar makes dollardenominated gold costlier for non-US investors.

“The dollar ( has been) a lot stronger, that’s the main driver here,” said Matthew Turner, a commodities strategist at Macquarie.

“Also, gold hasn’t seemed to benefit from the (trade) turmoil, so I imagine that’s made some longs throw in the towel.”

One trader, however, says bullion is being pressured more from speculators and investors abandoning their positions.

“Gold is being driven by some capitulation in investors, rather than being primarily driven by the dollar,” said Rob Haworth, senior investment strategist for US Bank Wealth Management.

Gold-backed exchange-traded funds tracked by Thomson Reuters were headed for their weakest month since July 2017, as investors covered losses in equities, commodities and other markets caused by tariff disputes.

“Trade tensions aren’t helping gold at all, there is only one clear trend which is skewed to the downside,” said Think-Markets chief market analyst Naeem Aslam.

Enhancing tensions, US Treasury Secretary Steven Mnuchin said forthcoming investment restrictions from the department will not be specific to China, but would apply “to all countries that are trying to steal our technology.”

Among other precious metals, silver lost 0.30% at $16.26 an ounce, slipping to $16.10, its lowest since May 1.

Platinum fell 0.30% to $867.40 an ounce, while palladium rose 2% to $958.25, after having earlier touched its lowest since early April at $929.72. —