Gold hovers near one-year lows
US dollar up on news Trump may propose higher tariff on Chinese imports
US dollar edges up on news that US President Trump may propose higher trade tariff on Chinese imports |
Gold was stable near oneyear lows yesterday on a stronger dollar, as the market waited for signals on the direction of US monetary policy from a Federal Reserve meeting later in the day.
Spot gold edged down 0.1 per cent to $1,223.08 (Dh4,491.76) per ounce by 1045 GMT, close to a oneyear low of $1,211.08 reached on July 19. US gold futures were 0.2 per cent lower at $1,231.80 an ounce.
The Fed is expected to keep rates unchanged, but solid economic growth combined with rising inflation are likely to keep it on track for another two hikes this year, sapping demand for non-interestpaying gold.
“People are waiting to understand what is going to happen with the Fed later but there are no signals of recovery at all for gold,” said ActivTrades chief analyst Carlo Alberto De Casa, who said bullion remained in a bearish trend. A key support area for gold in the short term is around $1,211-$1,215 per ounce, De Casa said.
The Fed is expected to keep rates unchanged, but solid growth combined with inflation is likely to keep it on track for two hikes.
Safe-haven flows
The US dollar, in which gold is priced, rose against a basket of leading currencies after a source familiar with the Trump administration’s plans said the White House was about to propose higher tariffs on $200 billion in Chinese imports.
Gold, which is usually used as a hedge against risk, bounced on the news on Tuesday to $1,228 but lost steam as the dollar advanced.
“The trade tensions are also fuelling safe-haven flows into the dollar. The US currency still appears to be the preferred safe haven rather than gold,” OCBC analyst Barnabas Gan said. “Bullion is falling every time the US dollar is strengthening, but it’s unable to recover when the greenback loses ground, confirming that there’s little investor appetite for gold in this phase,” ActivTrades’ De Casa said.
Meanwhile, trade tensions also pushed world stocks lower as investors feared a trade war between Washington and Beijing could hit global growth.
Hedge funds and money managers increased their net short position in Comex gold contracts to a record in the week to July 24, US Commodity Futures Trading Commission data showed on Friday.
In other precious metals, silver declined 0.5 per cent to $15.44 an ounce. Platinum lost 0.8 per cent to $828.20 an ounce and palladium slipped 0.5 per cent to $925.