Gold price steady as dollar softens on Trump interest rate comments

London (July 23)  Gold prices were steady on Monday near a one-week high as the dollar eased to its lowest in nearly two weeks after U.S. President Donald Trump criticised the Federal Reserve's interest rate tightening policy. Spot gold held steady at $1,231 an ounce at 0738 GMT. The yellow metal touched its highest since July 17 at $1,235.10, earlier in the session. U.S. gold futures for August delivery were nearly unchanged at $1,231 an ounce.

The dollar index , which measures the greenback against a basket of six major currencies, was down 0.1 percent at 94.340. It fell to its weakest since July 11 during the session. "Comments over the weekend from Trump changed the environment somewhat, with the apparent push now to really weaken the U.S. dollar," said ANZ analyst Daniel Hynes. The dollar has been a significant headwind for gold over the past month or so. It opens up the possibility that we will not see that continued strength in the U.S. dollar, Hynes added. A weaker greenback makes dollar-priced gold cheaper for buyers using other currencies. Trump on Friday reinforced his criticism of the Federal Reserve's policy on raising interest rates, saying it takes away from the United States' 'big competitive edge' and could hurt the U.S. economy. Meanwhile, the bullion, which usually gains from political and economic tensions has struggled this time around. Trump warned Iranian President Hassan Rouhani on Sunday not to threaten the United States or face the consequences, hours after Rouhani told Trump that hostile policies toward Tehran could lead to "the mother of all wars." Trump on Friday said he was ready to impose tariffs on all $500 billion of imported goods from China, threatening to escalate a clash over trade policy that has unnerved financial markets. "The overall sentiment is negative when it comes gold. This is despite the fact that we have seen more tension between U.S. and Iran," said Naeem Aslam, ThinkMarkets.com chief market analyst. "However, the net impact isn't that big at all. The dollar weakness has brought some life for gold but nothing major there as well."

Hedge funds and money managers switched to a net short position in COMEX gold contracts for the first time since 2016 in the week to July 17, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. In other precious metals, silver was up 0.1 percent at $15.49 an ounce. Palladium fell 0.7 percent at $888.20 an ounce and platinum was 0.2 percent higher at $827.70 an ounce.

Reuters