Gold gets support from softer dollar, but more weakness seen

Speculators trim their net short positions in yellow metal and silver

Asofter dollar lifted gold yesterday after two sessions of declines, but investors prepared for more weakness as simmering USChina trade tensions suggested the currency would stay supported and the world’s largest economy remained robust.

Spot gold was up 0.4 per cent at $1,197.43 (Dh4,397.56) an ounce by 1000 GMT after falling 0.6 per cent on Friday, when it marked its third straight weekly decline. US gold futures added 0.1 per cent to $1,202.

The dollar index was slightly weaker yesterday after seeing its biggest daily rise since August 23 on Friday.

“The main issue is that this concern over trade tensions between the US and China is translating into a stronger dollar, and that is weighing on gold,” said Jonathan Butler, commodities analyst at Mitsubishi in London.

China’s Foreign Ministry yesterday said that the government would respond if the United States implements new tariffs, ahead of US President Donald Trump’s expected announcement of new duties on $200 billion (Dh734.6 billion) in Chinese goods.

“I think we’ll continue to see gold under pressure. As long as the dollar remains relatively well supported, yields continue to rise and the US economic growth story remains in place, it’s hard to see where a strong rally would come from in gold,” Butler said.

Gold prices have declined more than 12 per cent from April, hurt by intensifying global trade tensions and rising US interest rates. Spot gold may retest support at $1,193 per ounce after bouncing moderately into a range of $1,197$1,200, according to Reuters technical analyst Wang Tao.

Gold has held a $25 range for the past few weeks and could remain there until the markets receive specific guidance on rate hikes from the upcoming September Fed meeting, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

12%

fall in gold prices from April on back of trade woes, rising US rates