Gold prices slip for a second day as dollar strength outweighs safe-haven demand
Gold prices fell for a second day on Tuesday to the lowest since December as strength in the U.S. dollar put pressure on the yellow metal, offsetting safe-haven demand amid mounting global trade tensions.
Spot gold fell 0.2 percent to $1,239.63 an ounce as of 0342 GMT after earlier dropping to its lowest since December 12 at $1,237.36. In the previous session, it fell about one percent. U.S. gold futures were 0.1 percent lower at$1,240.60 an ounce.
“It’s all about the USD (U.S. dollar) demand rather than any news specific as the markets insatiable demand for USD to ride out yet another building perfect storm has the USD glittering. As such gold is especially vulnerable in such an environment,” said Stephen Innes, APAC trading head at OANDA.
The dollar was a shade lower on Tuesday but remained broadly supported after strong U.S. economic data.
A stronger dollar increases the cost of dollar-denominated bullion for investors paying in other currencies.
Meanwhile, Asian shares hit a nine-month low on Tuesday on rising fears over tense trade relations between the United States and major economies, as Chinese markets saw another rocky day. The United States is set to place tariffs on $34 billion worth of Chinese goods on July 6.
U.S. President Donald Trump warned the World Trade Organization on Monday that “we’ll be doing something” if the United States is not treated properly, just hours after the European Union said that U.S. automotive tariffs would hurt its own vehicle industry and prompt retaliation.
The U.S. Chamber of Commerce on Monday denounced President Trump’s handling of global trade disputes, issuing a report that argued tariffs imposed by Washington and retaliation by its partners would boomerang badly on the American economy.
Gold is usually seen as a safe-haven asset in times of political and economic uncertainties but has lately failed to do so.
“Gold seems to be under pressure until we get to a level when everyone starts stepping in but that might be only between $1,235-$1,215 era,” a Hong Kong-based trader said.
Spot gold may break a support at $1,237 per ounce and fall to the next support at $1,229, Reuters technicals analyst Wang Tao said.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.19 percent to 809.31 tonnes on Monday.
In other precious metals, silver was down 0.1 percent at $15.82 an ounce and palladium fell 0.4 percent to $940.10 per ounce.
Platinum was 0.3 percent lower at $813.30 an ounce. In the prior session, it fell to the lowest since December 2008 at $804.
Autocatalyst metal platinum tumbled as the greenback strengthened, an intensifying U.S.-European Union trade spat pressured precious metals, and political risk in Germany weighed.
Source: Reuters
