LONDON: Gold prices slipped on Wednesday as US threats of tariffs on an additional $200 billion of Chinese goods pushed safe-haven flows to the dollar and dashed hopes that Washington will eventually step back from the escalating row.
“Gold options keep getting higher and higher, which means people are positioned for prices to rise. It tells us there is overhanging positive sentiment to gold but right now the money is sitting on the sidelines,” ING analyst Oliver Nugent said.
Spot gold was 0.5pc lower at $1,249.74 an ounce at 1144 GMT. In the previous session, bullion hit a one-week low at $1,246.81. US gold futures for August delivery were 0.5pc lower at $1,249.80 an ounce.
Spot gold may break support at $1,247 per ounce and fall more towards the next support at $1,237 as it has completed a bounce from the July 3 low of $1,237.32, Reuters technicals analyst Wang Tao said. “When trade-war risk escalates, investors run for cover ... I always have gold as a hedge but it’s been more challenging to have this view when the US dollar is attracting haven flows,” said Stephen Innes, APAC trading head at OANDA.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 0.22pc to 799.02 tonnes on Tuesday. In the wider markets, global stocks fell while metals slumped to their lowest in a year on fears of a trade war. Falling equities, seen as risky assets, usually help gold, a traditional safe haven.
Silver shed 0.9pc to $15.91 an ounce and platinum was 0.8pc lower at $835.25 per ounce. Earlier in the session, both metals fell to their lowest since July 3. Palladium was down 0.8pc at $934.14 per ounce, after falling to a two-week low at $931.75.
Published in Dawn, July 12th, 2018