After slipping to more than six-month low, gold recovers somewhat

London — Gold steadied after falling to its lowest level in more than six months on Thursday, as mounting pressure from a US-driven trade dispute propelled the dollar to near a one-year high and led investors to dump equities.

Global equities slipped to their lowest in almost three months, buffeted again after US President Donald Trump outlined plans to clamp down on Chinese acquisitions of sensitive US technologies.

The trade tension pushed the dollar to test a one-year high against a currency basket, before fizzling out as rising inflation in some German regions prompted traders to buy the euro.

A strong dollar makes dollar-priced gold costlier for nonUS investors and while falling equities, seen as risky assets, usually help safe-haven gold, they have failed to do so this time.

“There is some safe-haven demand going into gold but not as much as is going elsewhere, like the dollar or treasuries or safe-haven currencies like the franc,” Capital Economics analyst Simona Gambarini said.

Spot gold edged up 0.1% to $1,253.10 an ounce at 1.58pm GMT. Earlier, it touched $1,248.21, its lowest since mid-December.

US gold futures for August delivery dropped 0.2% to $1,254.20 an ounce.

Investors are positioning for a potentially fraught meeting of EU leaders to discuss issues such as migration, Brexit and trade. They are also looking for indications on the survival prospects for the fractious new German coalition.

“Nowadays, there is no safe-haven appeal for gold, people are tracking other assets as safe havens,” said Hareesh V, head of commodity research, Geojit Financial Services.

In a nod to dollar bulls, Boston Federal Reserve president Eric Rosengren said on Wednesday that the central bank should continue to raise interest rates gradually to lower the risk of a major policy error.

“Only a weaker dollar would bring the shine back for [gold].

The dollar index’s strength is mainly powered by hopes for higher rates and rising yields and there seems to be no change in this any time soon,” said ThinkMarkets.com in a note. Indicating falling demand for gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.36% to 821.69 tonnes on Wednesday.

In other precious metals, spot silver was 0.3% higher at $16.10 an ounce. In the prior session, it touched its lowest since mid-December at $15.94. Palladium slipped 0.6% to $947.60 an ounce. Platinum fell 0.7% to $850.00 per ounce, having touched $845.50, its lowest since late January 2016.

With Karen Rodrigues

Reuters