Gold barely moves in face of robust dollar
Bengaluru — Gold prices were steady on Thursday, as simmering China-US trade tensions underpinned the dollar, while bullion investors looked for a direction after the minutes of the US Federal Reserve meeting indicated there was no hurry in cutting rates.
Spot gold was steady at $1,273.37/oz at 2.51am GMT, after falling to $1,268.97 on Tuesday — its lowest level since May 3.
US gold futures edged down 0.1% to $1,272.80.
“The short-term effect of the US-China trade conflict is driving the US dollar index higher in general and that doesn’t help gold,” said Nicholas Frappell, global GM at ABC Bullion.
“Also, during mid-May, plenty of fresh buying went into long positions at higher levels, and since then open interest on the CME has declined, which implies that some of those longs got out and are on the defensive.”
The US administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country’s treatment of its Uighur Muslim minority, a person briefed on the matter said on Wednesday.
The dollar index against a basket of six major currencies edged up 0.1% to hover near its one-month high touched early in the week.
Asian shares were in the red on Thursday amid concerns over US-China trade.
Meanwhile, minutes from the US Federal Reserve’s latest meeting showed that officials agreed their current patient approach to setting monetary policy could remain in place “for some time”, a further sign policymakers see little need to change rates in either direction.
“Commentary reiterating officials’ wait-and-see approach amid a raft of global uncertainties may cool rate-cut hopes,” said Ilya Spivak, senior currency strategist at DailyFx.
“That seems inherently US dollar-supportive, with haven demand [for the dollar] acting as a further accelerant as markets pining for policy support tilt into risk-off territory.”
Lacklustre investor interest in bullion was reflected in the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. Holdings have declined nearly 7% so far in 2019.
SPDR holdings edged 0.1% lower to 738.81 tons on Wednesday.
Among other precious metals, silver fell 0.4% to $14.43/oz, while palladium edged 0.2% lower to $1,312.45.
Platinum was steady at $799.02/oz, after touching its lowest level since February 15 at $792.50 earlier in the session.