Gold fell on Monday, with prices dropping below the $1,200 technical level, as the dollar strengthened on worries over the potential for more tariffs between the United States and China as part of their trade war.
Spot gold was down 0.2 percent at $1,199.56 an ounce at 0255 GMT, while U.S. gold futures were down 0.2 percent at $1,204.30 an ounce.
“Gold prices are down on the strong dollar, as the trade between the U.S and Canada has not been settled and (U.S. President Donald) Trump is pushing for another round of tariffs on China. All this is bad news for gold,” said Ji Ming, chief analyst at Shandong Gold Group.
Trump has told his aides he is ready to impose tariffs on an additional $200 billion worth of imports from China as soon as a public comment period on the plan ends on Thursday.
Trump said on Saturday there was no need to keep Canada in the North American Free Trade Agreement and warned Congress that he would terminate the trilateral trade pact altogether.
“If the tariffs are imposed this week, then gold might go down further to around $1,180 levels. But, that is a good range to get in as a lot of physical investors are interested in buying at these prices,” Ming said.
Spot gold targets $1,185 per ounce, as it has broken a support at $1,200 again, according to Reuters technical analyst Wang Tao.
Gold prices have fallen about 8 percent so far this year amid rising U.S. interest rates, international trade disputes and the Turkish currency crisis, with investors parking their money in the U.S. dollar.
The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent at 95.204.
“In the near term, we see gold trading in a narrow range of $1190-1210, with move out of this range on either side would see further downside or upside risk,” said John Sharma, an economist at National Australia Bank.
Meanwhile, there is some indication that the bearish sentiment in the market has started to shift as there was a reduction in net short positions in the COMEX gold contracts in the week to Aug. 28, a first time in more than a month.
However, liquidations continued in SPDR Gold, the world’s largest gold-backed exchange-traded fund. Holdings have fallen over 13 percent since a peak in late April.
Spot silver fell 0.2 percent to $14.47 an ounce, after earlier falling to its lowest in more than two weeks at $14.37.
Platinum rose 0.6 percent to $787.40 an ounce, while palladium was down 0.5 percent to $976.60, after hitting a 10-week high on Friday at $984.97.