Gold eases as dollar holds near multi-month high

Bengaluru — Gold fell on Wednesday as the dollar held near a multi-month high, buoyed by interest from investors seeking cover from sliding stocks and by prospects for higher US interest rates.

Spot gold was down 0.2% at $1,200.18 an ounce at 11.21am GMT. Prices had slipped to their lowest since October 11 at $1,195.90 in the previous session. US gold futures fell 0.1% to $1,200.6 an ounce.

“The continuing dollar strength is weighing on gold. What people are doing is selling everything to buy the dollar and that includes gold,” said Alasdair Macleod, head of research at GoldMoney.

The dollar index, a gauge of its value against major currencies, was firm near a 16-month high, after retracing slightly earlier in the session as investors took profits, prompted by gains in the euro and sterling on the back of growing confidence about a draft Brexit deal.

The British cabinet will meet at 2pm GMT to consider the withdrawal agreement.

Meanwhile, stocks fell on worries about a slowdown in global economic growth.

Gold, considered a safe haven asset, has fallen about 12% since hitting a peak in April as investors flocked to the dollar instead, with the US-China trade war unfolding against a backdrop of higher US interest rates.

Market participants will also be keeping a close eye on US Federal Reserve chair Jerome Powell’s appearance in the Federal Reserve Bank of Dallas Global Perspective Speaker Series at 11pm GMT for clues on the US monetary policy outlook. The dollar has benefited over the last week from expectations of further US interest rate hikes.

“Gold is likely to be range-bound for the reminder of the year … progress for a sustained rally doesn’t appear to be the emphasis,” said Capital Economics analyst Ross Strachan.

Spot gold may bounce to $1,211 an ounce, as it has found support around $1,195, said Reuters technical analyst Wang Tao.  Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, fell 0.11% to 761.16 tonnes on Tuesday.

Among other precious metals, silver was down 0.2% to $13.95 an  ounce, having matched its lowest since January 21, 2016, at $13.85. Palladium fell 0.5% to $1,104.65 an ounce, while platinum was down 0.3% at $832.10 an ounce. 

Reuters