Gold claws back losses as investors search for bargains

Bengaluru — Gold prices edged higher on Tuesday as investors resorted to bargain-hunting after the precious metal fell to more than one-month lows, weighed down by a stronger dollar.

Spot gold was up 0.3% at $1,204.22/oz at 0339 GMT, having touched its lowest since October 11 at $1,199.72 earlier in the session.

US gold futures inched up 0.1% to $1,204.7/oz.

“It’s been some time that we have seen this level, so we are seeing some buying here,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

“However, a stronger dollar has capped the market.”

The dollar index, which measures the greenback against a basket of six major currencies, was sitting just shy of its 16-month high of 97.69 hit on Monday, benefiting from safe-haven flows as investors shunned riskier assets because of political uncertainties in Europe, fears of a global economic slowdown and China-US trade tensions.

A firmer greenback makes bullion expensive for holders of other currencies as the commodity is priced in dollars.

Gold, usually viewed as a safe store of value during political and economic uncertainty, has fallen more than 12% from its April peak as investors largely turned to the dollar as the China-UA trade war unfolded against a background of higher US interest rates.

Spot gold may bounce moderately to $1,211/oz before breaking a support at $1,202 and falling more to $1,192, said Reuters technical analyst Wang Tao.

Meanwhile, Asian shares skidded on Tuesday after a rout in tech stocks pulled down Wall Street.

Gold will remain an important portfolio diversifier amid rising volatility, ANZ analysts said in a note.

“We see the recovering ETF [exchange-traded fund] holdings and the risk-off tone of the equity market boding well for gold prices.”

Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, rose 0.9% to 762.00 tons on Monday.

Among other precious metals, silver was up nearly 1% at $14.09/oz, having touched a more-than-two-month low of $13.95 earlier in the session.

Palladium climbed 1.16% to $1,108.20/oz and platinum rose 0.6% to $845.80/oz.

Reuters