Gold dips to hover close to 2018 low

Bengaluru — Gold prices dipped slightly on Tuesday, hovering not far from a 2018 low struck in the previous session as a firm dollar near five-month highs and optimism in global markets curbed appetite for the precious metal.

Spot gold eased 0.1% to $1,290.66/oz as of 2.50am GMT. In the previous session, it slid to $1,281.76/oz, its lowest since December 27.

US gold futures for June delivery were 0.1% lower at $1,290.10/oz.

“I think the overriding narrative here is where the dollar is going,” said Stephen Innes, Asai-Pacific trading head at Oanda.

Abating geopolitical risk was also weighing on sentiment for gold, he added. The dollar traded below a five-month high against a basket of currencies on Tuesday, catching its breath after a broad rally inspired by rising US bond yields and relief at an easing of US-China trade tensions. Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost US exports to China.

Meanwhile, Asian shares extended gains on Tuesday on renewed optimism about global growth after the US-China agreement.

The expectation that the Federal Reserve will lift US interest rates again in June added to downward pressure on gold. Higher US rates tend to boost the dollar and push bond yields up, make non-yielding assets like bullion less attractive.

US treasuries were steady on Monday, after benchmark yields rose to a seven-year peak last week, as investors awaited release of the latest Federal Reserve minutes on Wednesday. Rising inflation meant the Fed should increase interest rates two or possibly three more times this year, and could move as soon as June, Philadelphia Fed President Patrick Harker said on Monday.

“Somewhere around the $1,275 level we are going to start to attract more bullish sentiment but in the meantime the driver is going to remain the US dollar,” Innes said.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.38% to 852.04 tonnes on Monday.

Among other precious metals, silver was little changed at $16.47/oz.

Palladium was steady at $989.70/oz, while platinum rose 0.1% to $897/oz, after marking a fresh low for the year in the previous session at $873.50.