Gold slips below $1,240 as dollar gains

london — Gold slipped back below $1,240 an ounce on Wednesday as the dollar’s recovery from 10-month lows dampened upward momentum in the metal after three straight sessions of gains.

Gold prices had risen two per cent by late Tuesday from early Friday levels as the collapse of US President Donald Trump’s healthcare bill and waning expectations for further rate hikes from the Federal Reserve this year pressured the dollar.

The US currency edged up 0.2 per cent against the euro on Wednesday but stayed on the defensive as investors wagered any further tightening in the United States would be slow at best, while optimism on China’s economy underpinned Asian shares and commodities.

Spot gold was down 0.3 per cent at $1,238.50 an ounce at 0930 GMT, while US gold futures for August delivery were down $3 an ounce at $1,238.90. Spot gold reached a two-week high of $1,244.56 on Tuesday.

“Up until today, the dollar has been weakening quite a bit, which has been supportive for gold. Today, we’ve seen the dollar a bit stronger, so we’re seeing some weakness,” ING analyst Warren Patterson said.

The bank has a more optimistic view of gold prices as the year progresses, he said. “We believe a large part of the interest rate hike [and] monetary tightening expectations are priced in, so we don’t think that should weigh too much more on gold prices.” — Reuters