Gold trades at 15-week low as stronger dollar weighs

New York (Mar 10)  Gold fell to the lowest level in almost four months on Tuesday, as a broadly stronger U.S. dollar dented the appeal of the precious metal.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, hit highs of 11-year highs of 98.18 on Tuesday.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Demand for the dollar continued to be underpinned after the latest U.S. jobs report solidified expectations for higher interest rates.

The Fed is expected to begin raising interest rates around the middle of this year and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery touched a session low of $1,156.20 a troy ounce, a level not seen since December 1, before trading at $1,157.40 during European morning hours, down $9.10, or 0.78%.

Futures were likely to find support at $1,141.70, the low from December 1, and resistance at $1,174.40, the high from March 9.

On Monday, gold ticked up $2.20, or 0.19%, to end at $1,166.50 amid tense talks between Greece and the Eurogroup of finance ministers about Greek reform proposals.

Last month Athens reached a temporary agreement with its lenders to extend its bailout by four months, but must complete a bailout review by April before it can access further financial aid.

Meanwhile, silver futures for May delivery slumped 10.8 cents, or 0.68%, to trade at $15.66 a troy ounce after hitting an intraday low of $15.63, the weakest level since January 5.

Elsewhere on the Comex, copper for May delivery slipped 2.1 cents, or 0.77%, to trade at $2.650 a pound after data showed that producer price deflation in China deepened in February, underling concerns over a slowdown in the world's second largest economy.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Source:INvesting.com