Gold price hits one-week high, helped by softer dollar
London (July 4) Gold hit a one-week high on Wednesday, rebounding from this week’s seven-month low, helped by a softer dollar and smouldering trade tensions, though the move was limited ahead of Friday’s US jobs data.
The dollar fell against the euro and the yuan, with the Chinese currency continuing its recovery from 11-month lows after the central bank took steps to stem its rapid rise. A weaker dollar makes dollar-priced gold cheaper for non-US investors.
"Gold has been trending lower for several weeks and this being non-farm payrolls [week] the dollar is likely to remain in range, so people are taking profit on dollar and gold positions," said Fawad Razaqzada, an analyst at FOREX.com. "I’m still not convinced we’ve seen the lows so long as gold remains below $1,300. The dollar is on an upwards trajectory. I don’t think [looming interest rate] hikes are priced into the dollar or gold."
Spot gold was up 0.3% at $1,256.06 an ounce as of 10.08am GMT after touching $1,261.10, a one-week high. Gold has gained more than $20 from Tuesday’s low of $1,237.32 an ounce, its weakest since December 12. US gold futures for August delivery were trading 0.3% higher at $1,257.50 an ounce.
World stocks were dragged lower by growing anxiety ahead of Washington’s end-of-week deadline to impose tariffs on $34bn of Chinese imports, and Beijing’s vow to retaliate in kind on the same day.
"Since the trade wars have been doing the rounds, if anything we’ve seen gold come lower. But if it continues to escalate, gold could go only one way and that’s higher," a Sydney-based trader said.
China is putting pressure on the EU to issue a strong joint statement against US President Donald Trump’s trade policies at a summit later this month but is facing resistance, European officials said. Gold is often regarded as a safe haven during times of political and financial uncertainty.
Markets are awaiting minutes of the June US Federal Reserve meeting due on Thursday and the US non-farm payrolls data on Friday for cues on monetary policy.
Valuations remain supportive of the dollar, with the market pricing in two more interest-rate hikes for 2018.
Silver was 0.2% lower at $16.03 an ounce and palladium gained over 0.6% to $946.10. Platinum dipped 0.3% at $834.75 an ounce. The metal fell on Tuesday to the lowest since December 2008 at $793.
US markets will remain closed on Wednesday for the Independence Day holiday.
Reuters
