Gold Prices Set for Second Weekly Slump Despite Dollar's Dash Lower

New York (June 22)  Gold prices remained close to their lowest level this year as a weaker dollar failed to stoke appetite for the yellow metal.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $0.50 or 0.04%, to $1,270.10 a troy ounce. Gold prices had hit a 2018 low of $1,260.00 on Thursday before clawing back losses.

A sluggish dollar drew a muted reaction in gold prices – which remained on course for a second-straight weekly slump after falling nearly 3% this week – as traders fear a more hawkish Federal Reserve would stifle demand for the yellow metal.

Expectations for a fourth rate hike at the Fed's December meeting rose to nearly 50% from about 40% on Thursday, according investing.com's Fed Rate Monitor tool.

Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.

Gold prices were also unable to capitalise on a modest uptick in safe haven demand in the wake of U.S. President Donald Trump's threat to impose a 20% tariff on all car imports from the EU.

Renewed threats of trade penalties on imported EU goods come a day after the EU's retaliatory tariffs on imported U.S. goods came into effect late Thursday.

In other precious metal trade, silver futures rose 0.70% to $16.44 a troy ounce, while platinum futures climbed 1.36% to $875.10 an ounce.

INVESTING.COM