Gold prices dropped on Tuesday, dropping for the first time in four sessions, as the dollar rebounded from multi-week lows after the European Union parliamentary election results and amid simmering Sino-U.S. trade tensions.
Markets were mostly subdued in the previous session with the financial markets in the U.K. and the United States being closed for holidays.
Spot gold was down 0.1% at $1,283.29 per ounce, as of 0338 GMT, after touching its highest since May 17 at $1,287.32.
U.S. gold futures were down 0.1% at $1,282.30 an ounce.
“The price action in gold has been a little bit disappointing and pretty negative. It has not been able to break above $1,290-$1,300 despite the given background of trade tensions, pause in the Fed and volatile equity markets, ” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.
“Some of the money flows are moving to bitcoin. Seems like the cryptocurrencies are eating gold for lunch at the moment … Also, there is nothing at present which is looking to undermine the dollar strength.”
Against a basket of six peers, the dollar gained 0.2% to 97.806 after touching its lowest since May 16 at 97.546 on Friday.
The greenback nudged up on Tuesday against its key rivals as investors waited on more catalysts after the European Union parliamentary elections showed a polarization of the 28-member block.
Bitcoin, which had touched $8,939.18, its highest level in more than a year on Monday, was last up 0.4% at $8,810.82. On May 13, the cryptocurrency topped $8,000 for the first time since July 2018.
Meanwhile, U.S. President Donald Trump said on Monday in a news conference with Japanese President Shinzo Abe that he was “not ready to make a deal with China ”, the latest blow to beliefs that the two countries might reach a deal soon.
A string of weak data from the United States late last week stirred up concerns that its protracted trade war with China has started taking a toll on the country’s economy, and promoted bets for a much-expected rate cut by the U.S. Federal Reserve.
Bullion seems to have found a base around $1,270 despite failing to break much higher, analysts said.
“Gold is set to improve and trend toward $1,300,” analysts with TD Securities said in a note.
“Lower rates, a flat (yield) curve and a growing likelihood of rising equity market volatility are all helping gold, suggesting buying the dips may well be the order of the day in the precious space.”
Among other precious metals, silver dipped 0.5% to $14.54 per ounce, while palladium fell 0.4% to $1,330.70.
Platinum edged 0.7% higher to $811.82 an ounce.