LONDON: Gold prices ticked lower on Monday under pressure from selling by investors as well as a firmer dollar and another escalation in the trade conflict between China and the United States.
Spot gold was down 0.5 per cent at $1,207.51 an ounce by 1225 GMT after climbing as high as $1,217.85 in early trade. US gold futures shed 0.6pc at $1,215.80 an ounce.
“Overall the bears remain in control and they continue to increase their short positions – both the net and gross are hitting records,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. Hedge funds and money managers added a hefty 13,931 contracts to their net short position in the week to July 31, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006, data showed on Friday.
Gold has been in a downtrend since touching a peak of $1,365.23 on April 11. It has shed over 11pc and hit a 17-month low on Friday.
The dollar rose on Monday, building on two consecutive weeks of gains, as investors bet that trade war rhetoric and a strong US economy would continue to drive the currency higher. Investors have largely been buying the dollar as a safe haven asset rather than gold as the US-China trade dispute escalates.
China proposed retaliatory tariffs on $60 billion of US goods on Friday, after US President Donald Trump’s administration proposed a higher, 25pc tariff on $200 billion of Chinese imports. Chinese state media on Monday lambasted Trump’s trade policies in an unusually personal attack.
In other precious metals, silver fell 0.5pc to $15.30 an ounce, platinum dipped 0.1pc to $826 an ounce, while palladium declined 0.2pc to $907.48 an ounce.
Published in Dawn, August 7th, 2018