ICEC

Gold prices rise as dollar weakens on global trade worries

Gold prices inched up on Monday as a buoyant euro kept the dollar off its 11-month highs, with trade issues between the United States and the European Union further supporting the bullion.

Spot gold was up 0.3 percent at $1,271.79 an ounce, as of 0059 GMT. U.S. gold futures for August delivery were 0.2 percent higher at $1,273.60 per ounce.

U.S. President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all U.S. imports of European Union-assembled cars.

The euro on Monday kept the dollar away from an 11-month high, with trade issues between the United States and the European Union seen deciding the near-term direction for the currencies.

The single currency was lifted after Friday’s upbeat German and French business activity data and fresh assurances by Italian politicians that their nation would not leave the single currency.

A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.

The European Union will respond to any U.S. move to raise tariffs on cars made in the bloc, a senior European Commission official said, the latest comments in an escalating trade row.

The Bank for International Settlements (BIS) urged the world’s top central banks to keep lifting interest rates on Sunday, but warned escalating trade tensions between the United States and China could turn into a dangerous downward spiral.

The European Central Bank will end its asset purchases by year-end as scheduled, according to a Reuters poll of economists who said the risk bond-buying will continue into next year was low, even with growth likely to slow and inflation stay tame.

Japan’s core inflation remained subdued in May, yet again highlighting how far off the central bank is in hitting its two percent price goal despite over five years of massive stimulus.

U.S. protectionism is self-defeating and a “symptom of paranoid delusions” that must not distract China from its path to modernization, Chinese media said on Friday as Beijing kept up with its war of words with Washington while markets wilted.

The Iranian rial plunged to a record low against the U.S. dollar on the unofficial market on Sunday, continuing its slide amid fears of returning U.S. sanctions after President Donald Trump in May withdrew from a deal on Tehran’s nuclear program.

Speculators trimmed their net long position in COMEX gold to the weakest position in 2-1/2 years in the week to June 19, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

Source: Reuters

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