Gold price edges up from one-year low as Trump slams strong dollar
London (July 20) Gold prices edged up from one-year lows on Friday after U.S. President Donald Trump expressed concern about the strength of the dollar and interest rate increases by the Federal Reserve, pushing the greenback lower. Spot gold was up 0.1 percent at $1,223.71 an ounce at 1046 GMT and U.S. gold futures were flat at $1,223.50 an ounce. But gold was still down 1.4 percent this week, with little sign of an end to the slide in prices that has shaved more than 10 percent off gold's value since mid-May. Driving the declines were a strengthening dollar and disillusionment among investors with bullion, said Macquarie analyst Matthew Turner.
The stronger dollar makes gold more expensive for buyers with other currencies. Higher interest rates are also a threat to gold because they tend to boost the dollar and raise the opportunity cost of holding non-yielding bullion.
"To see a turnaround (in prices) you need something to ignite that turnaround. But it's not clear what that could be," Turner said.
One possible trigger could be sharp falls on global stock markets that would drive investors to gold, seen as a safe asset. Another could be a sharp weakening of the dollar, which Turner said he expected to see later this year or next year.
Despite Trump's intervention, the dollar was near one-year highs on Friday as Fed Chairman Jerome Powell did nothing this week to counter expectations of two more rate rises this year and said the United States was poised for several more years of growth. Meanwhile, funds and money managers have cut their net long position in Comex gold to a 2-1/2-year low, helping drive down prices.
And gold-backed exchange traded funds (ETFs) tracked by Reuters have cut their holdings by 5.5 percent, or 3.2 million ounces, since mid-May. Gold on Thursday touched $1,211.08 an ounce, the lowest since July last year.
On the technical front, support was at gold's July 2017 low $1,204.90 and Fibonacci resistance was at $1,234.70, analysts at ScotiaMocatta said, adding that technical and momentum indicators suggested prices would fall further.
In other precious metals, silver was up 0.3 percent at $15.31 an ounce but still down about 2.8 percent this week. Palladium was 1.5 percent higher at $882.97 an ounce but set for a weekly loss of around 5.8 percent. Platinum had gained 1 percent to $812.99 an ounce and was down around 1.5 percent this week.
Reuters
