Gold price falls as trade tensions keep dollar afloat
New York (Sept 18) Gold prices fell on Tuesday as the dollar firmed after China said it would retaliate against a new round of U.S. tariffs on its goods, intensifying tensions between the world's two largest economies.
U.S. President Donald Trump said he was imposing 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action. Although gold is presumed to be a safe-haven asset, the months-long trade rift between Washington and Beijing has prompted investors to buy U.S. dollars in the belief that the United States has less to lose from the dispute.
Spot gold fell 0.2 percent to $1,198.78 an ounce by 1030 GMT, after rising 0.6 percent in the previous session.
U.S. gold futures were down 0.2 percent at $1,203.10 an ounce.
"One of the big problems that gold is facing is that it is trying to battle a mountain of pessimism," ETF Securities analyst Nitesh Shah said.
"The speculative positioning in gold is down to its lowest levels since 2001 ... gold is not behaving like the haven that it is supposed to be."
Gold prices have declined more than 12 percent from April amid the intensifying trade dispute between the United States and China, and as rising U.S. interest rates diminish demand for non-interest-bearing bullion.
Investors were eyeing a meeting by the U.S. Federal Reserve next week at which interest rates are widely expected to be raised, said ActivTrades chief analyst Carlo Alberto De Casa.
"Any comments about the 2019 monetary policy could be a new significant driver for the precious metal," he said.
The dollar index , which measures the greenback against a basket of currencies, inched up 0.1 percent to 94.586.
Investors trimmed their net short position in Comex gold and silver in the week to Sept. 11, U.S. data showed. "Since the priced-in forecast for a December rate hike to follow the one this month has firmed despite soft U.S. data, this might ultimately lead the dollar higher and gold lower," said Ilya Spivak, a currency strategist for Dailyfx.
Spot silver fell 0.3 percent to $14.19 an ounce. Platinum rose 0.8 percent to $802.90, while palladium was up 0.5 percent at $989 an ounce.
Reuters
