LONDON: Gold fell to a more than 18-month low on Wednesday as the dollar climbed towards its highest in over a year on concerns about global market contagion triggered by recent declines in the Turkish lira.

Spot gold was down 0.7 per cent at $1,185.46 an ounce by 1106 GMT, after hitting its lowest since late January 2017 at $1,183.47.

The precious metal failed to make a convincing rebound in the previous session after it fell below the psychologically important $1,200 level for the first time in more than a year on Monday.

US gold futures were down 0.7pc at $1,192 an ounce.

“It’s risk aversion, which is something that should be supportive of gold, but ... this is happening in an environment where the dollar is looking very strong relative to other major currencies and emerging market currencies.” The yellow metal has declined about 9pc this year, pressured by rising US interest rates, a soaring dollar and a failure to capitalise on its traditional role as a hedge against global uncertainties.

Investors have opted for US Treasuries, seen as the ultimate safe haven, which meant they had to buy dollars, while bearish sentiment on gold has led to liquidations in exchange-traded funds (ETFs) and a record level of short positions.

The dollar rose to its highest level since June 2017 on worries over President Tayyip Erdogan’s calls for lower interest rates and fraying ties between the United States and Turkey, a Nato ally.

Holdings in SPDR Gold Trust, the world’s largest gold-backed ETF, fell 1.01pc to 776.65 tonnes on Tuesday. Holdings have fallen to their lowest since February 2016, down 11pc from their peak in April.

Support is at a recent low of $1,191.80, followed by the $1,150 level, while resistance is at $1,219.60, ScotiaMocatta said in a note.

Spot platinum slumped to its lowest since November 2008 at $769.10 per ounce. It was last trading at $774, down 3pc.

Spot silver was 1pc lower at $14.80, after falling to its lowest since April 1, 2016 at $14.76. Palladium was down 2.3pc at $875.

Published in Dawn, August 16th, 2018