Gold at near six-month lows once again

London — Gold slipped towards its lowest in more than six months on Monday as the currencies of key consumers weakened, making it more expensive for them to buy dollar-priced bullion.

The fear of a trade war between the US and China have helped to push China’s yuan to its weakest level against the dollar in more than seven months. The Indian rupee is also near a record low against the dollar, Japan’s yen is at its weakest since mid-May and the value of the euro was eroded by the potential for a row over migration policy to fracture the German government.

The increasing strength of the dollar has helped to drive down spot gold by more than 8% from its April high of $1,365.23. It was down 0.3% at $1,249.11 an ounce by 12.07pm GMT on Monday, close to last Thursday’s low of $1,245.32, the weakest since early December.

US gold futures for August delivery were down 0.3% at $1,250.90 an ounce.

The stronger dollar has dragged down gold in combination with a rapid decrease in funds’ bets on higher prices and the selling of gold held by exchange-traded funds (ETFs), said Société Générale analyst Robin Bhar. “It does seem to be a perfect storm for gold,” he said.

Funds and money managers have cut their net long position on the Comex exchange to the lowest since January 2016, while gold holdings by ETFs tracked by Reuters are down 3.6%, or more than two-million ounces, from late May.

Investors were looking ahead to the minutes of a June US Federal Reserve meeting on Thursday and US employment data on Friday, with an aggressive tone by the Fed or strong jobs numbers likely to be seen as bolstering the case for higher US interest rates.

That could drive gold prices even lower because higher rates tend to strengthen the dollar and also boost bond yields, reducing the appeal of non-yielding bullion. On the technical side, support was at the psychological level of $1,250 and gold’s December low of $1,236.60, ScotiaMocatta analysts said. Technical indicators suggest that gold could fall further, they added.

In other precious metals, silver was down 1% at $15.92/oz, near Thursday’s six-and-a-half-month low of $15.88.

Platinum was down 1% at $838.80 an ounce after touching its lowest since January 2016 at $831.71, while palladium fell 0.6% to $947.10.

Reuters

Source: businesslive.co.za