Home The Watchforex news Gold prices near three-week lows as firmer dollar dents safe-haven appeal

Gold prices near three-week lows as firmer dollar dents safe-haven appeal

by Amwal Al Ghad English
gold

Gold prices fell on Tuesday, hovering near three-week lows touched in the previous session, as a firmer dollar made bullion more expensive for buyers using other currencies, even as concerns about a global slowdown mounted.

Spot gold was down 0.2 percent at $1,277.24 per ounce by 0313 GMT, after touching its lowest since Dec. 28 at $1,276.31 on Monday. U.S. gold futures fell 0.4 percent to $1,277.20 per ounce.

The dollar hovered near 2-week highs against its peers on Tuesday.

“Gold has become a victim of a stronger greenback in the short term. A weaker euro and concerns around growth in Europe have given a leg up to the dollar, pushing gold prices down below key level of $1,280,” said Kyle Rodda, market analyst with IG Markets.

“We haven’t seen much of data coming out of U.S. recently due to the government shutdown. If we see more weaker data that could cause bond yields to fall and support gold. Also, technically, we need to see gold push above the challenge of $1,300 level.”

The dollar’s rise weighed on gold, which has climbed more than 10 percent since mid-August, largely because of equity market turmoil and a weak dollar.

A weaker Chinese economic data pressured the yuan, making gold more expensive for buyers in the world’s No.2 economy.

China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest level in nearly three decades.

Asian shares slipped on Tuesday as pessimism about world growth drove investors away from risky assets. The International Monetary Fund trimmed its global growth forecasts and a survey showed increasing pessimism among business chiefs as trade tensions loomed.

However, this did not have a big impact on gold prices.

“It seems that several factors boosting gold earlier in January now seem to be having no effect, namely, the far more dovish Fed statements and clearer signs of slowing global macro growth,” INTL FCstone analyst said in a note.

“Instead, it seems that gold is being undermined by a slightly stronger dollar along with a modest uptick in U.S. 10-year yields.”

Fed officials have left little doubt that they want to stop raising interest rates, at least for a while.

Higher interest rates tend to reduce appetite for non-yielding gold.

Meanwhile, spot palladium, which hit a record high of $1,434.50 last week driven by a sustained deficit and rising demand, stood firm at $1,361.50 an ounce.

Silver fell 0.1 percent to $15.20 an ounce while platinum was down 0.1 percent at $790.

Source: Reuters

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