BackGold prices steady after hitting a one-month low
Gold prices have fallen about 11%from its April peak after investors preferred the dollar as the US-China trade war unfolded against a background of higher US interest rates.
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Global gold prices steadied today after touching a one-month low in the previous session, but the metal remains under pressure from a firmer US dollar and expectations the Federal Reserve is on track to tighten borrowing costs. Spot gold was little changed at $1,209.71 per ounce at 0431 GMT. On Friday, prices fell to their lowest since Oct. 11 at $1,206.13 per ounce. “Higher US interest rates and a stronger dollar are flashing red for gold investors," said Stephen Innes, APAC trading head at OANDA in Singapore.
There was little to no safe haven appeal and robust US leading indicators showed the US services-based economy was firing on all cylinders, suggesting the Fed will hold the course on expected rate rises, he said.
The dollar index, which measures the greenback against a basket of six major currencies, inched up 0.1 percent.
The greenback built on last week’s gains and rose towards a 16-month high.
The Fed has reaffirmed its plan to raise interest rates by in December, followed by two more potential rate hikes by mid-2019 on the back of an upbeat economy and rising wage pressures.
“It seems like the bears are back in control... It’s disappointing that every time gold starts to rally it runs out of steam so fast," a Hong Kong-based trader said.
The precious metal has fallen about 11 percent from its April peak after investors preferred the dollar as the U.S.-China trade war unfolded against a background of higher U.S. interest rates.
Higher U.S. interest rates tend to boost the dollar and also push up bond yields, reducing the appeal of non-yielding bullion.
Spot gold is expected to test a support at $1,201, with a good chance of breaking below this level and falling more to $1,192, said Reuters technical analyst Wang Tao.
Hedge funds and money managers cut their net short position in gold by 8,136 contracts to 37,486 contracts, data showed.
In other precious metals, silver was little changed at $14.15 per ounce. Prices fell to their lowest level since Sept. 18 at $14.06 in the previous session.
Palladium was flat at $1,116.50 per ounce.
Platinum was up 0.2 percent at $851 an ounce.
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