Gold, silver slide to seven-month lows as the greenback strengthens

NEW YORK/LONDON — Gold and silver prices slid to sevenmonth lows on Friday as the dollar rose to a two-week peak, buoyed by safe-haven purchases made in an ongoing US-China tariff trade war. Demand for the precious metals also waned on expectations of higher US interest rates.

Spot gold lost 0.50% at $1,240.90 per ounce by 1:34 p.m. EDT ( 1734 GMT), after earlier falling to $ 1,236.58, its lowest since Dec. 12. US gold futures settled down $5.40, or 0.40%, at $1,241.20 per ounce.

Gold prices are down about nine percent since mid-April.

Silver fell by 0.60% at $15.80 an ounce, earlier hitting $ 15.67 per ounce, its lowest since Dec. 13.

The US dollar was little changed after peaking at a twoweek high on Friday against a basket of currencies after data showing a record Chinese trade surplus, which may add fuel to US-China trade tensions, spurred more investors to pile into the safety of the greenback. A rising US currency makes dollar- denominated gold more expensive for holders of other currencies, which potentially weighs on demand.

RATE EXPECTATIONS

“We (also) have increased expectations of Fed rate increases,” said Rob Haworth, senior investment strategist for US Bank Wealth Management.

The Fed’s semiannual report to Congress on Friday last week pointed to “solid” US economic growth last semester and reiterated that the US central bank expected to continue to raise interest rates gradually.

Higher interest rates make gold more expensive to own since bullion does not earn any interest or dividends, and costs money to store and insure.

Speculators recently cut their net long position in COMEX gold to the weakest position since January 2016. “Bullish speculation is now at a new low. We are reaching a point where we may be pausing here,” Mr. Haworth added.

Holdings for the largest goldbacked exchange- traded- fund, New York’s SPDR Gold Trust, have fallen more than eight percent since late April to below 26 million ounces.

OTHER PRECIOUS METALS

Platinum lost 1.9% at $823.50 an ounce, and palladium dropped 1.6% at $934.80.

“The global trade dispute is threatening to disrupt auto sales, placing a question mark over platinum and palladium demand,” ANZ analysts said in a note.

“While auto sales numbers suggest steady demand growth for palladium, expect a moderate decline in auto catalyst demand for platinum this year.”

More platinum than palladium is used in diesel engines, whose sales have fallen since Volkswagen was found in 2015 to have cheated in emissions tests. —