Gold turns positive after hitting two-week lows on trade tensions

NEW YORK/LONDON — Gold turned positive on Tuesday as investors bought when it approached $1,200 per ounce.

But bullion remained under pressure after hitting a two-week low and the dollar resumed its ascent amid broad risk-off sentiment, looming US interest rate rises and prospects for escalating US-China trade tensions.

Silver also succumbed to market pressures, hitting a two-anda-half-year low.

Investors began purchasing more gold as it crept toward the psychologically important $1,200 level, said Phil Streible, senior commodities strategist at RJO Futures in Chicago.

“Some investors see below $1,200 as a small window to buy, because historically we haven’t seen gold remain below $1,200 since late December 2016, even though I think it’s going to go down to match those previous lows,” he said.

Spot gold gained 0.2% at $1,197.28 per ounce by 1:49 p.m. EDT (1749 GMT). US gold futures for December delivery settled up $2.40 or 0.2% at $1,202.20 per ounce. “Higher real yields are stimulating the dollar, but gold is pretty subdued, which to me, means there’s a little bit of balance,” said Rob Haworth, senior investment strategist for US Bank Wealth Management.

The dollar edged up versus a basket of major currencies. Later in trade, the greenback backed off its earlier highs, which helped push gold higher.

Since its April peak gold has dropped more than 10% as a trade war between China and the US has driven investors to seek safety in the dollar rather than in gold, a traditional safe haven.

Bearish bets on Comex gold have risen to record levels while investors have liquidated exchange-traded gold fund holdings.

Broadly underpinning the greenback were Friday’s comments from US President Donald Trump that he was ready to impose tariffs on virtually all Chinese imports to the US and strong US jobs data. Last week’s jobs data cemented expectations the Federal Reserve will raise interest rates this month.

Higher interest rates increase bond yields, making non-yielding bullion less attractive. They also tend to boost the dollar, making dollar-priced gold costlier for non-US investors.

Gold is finding strong resistance at $1,200, with investors selling into any rallies that threaten to push it above that level, ANZ analysts said in a research note.

Silver fell 0.4% at $14.10 per ounce, having hit its lowest since January 2016 at $13.90. Platinum gained 0.6% at $786.99, while palladium lost 0.4% at $971.49 after hitting its highest in nearly 12 weeks at $991.15 on Monday. —