Gold fails to stay above $1,200 an ounce after dollar improves

London — Gold prices faltered on Thursday under pressure from a stronger dollar, as the US Federal Reserve reaffirmed intentions to raise interest rates, and as trade tariffs between the US and China took effect.

The metal failed to confirm its brief break through $1,200 on Wednesday, a key psychological level, as the dollar resumed its ascent.

Spot gold was down 0.6% at $1,188.19 an ounce at 10.44am GMT. Prices hit their highest since August 13 at $1,201.51 in the previous session.

Minutes of the Fed’s latest policy meeting suggested the central bank was on course to further raise interest rates after two hikes in 2018, denting demand for noninterest-yielding gold.

“Gold has fallen victim to another round of dollar strength,” said Saxo Bank analyst Ole Hansen.

“The market needs to see that the trajectory of US rate hikes is beginning to slow and that was not the signal in Fed minutes yesterday.” Meanwhile, trade tariffs imposed by the US and China on each other kicked in on Thursday, benefiting the safe-haven US currency, even as mid-level officials from both sides resumed talks in Washington.

Amid shocks to the global financial system caused by the ongoing trade war, investors have opted for the safety of US treasuries and the US currency, making dollar-denominated gold more expensive for holders of other currencies.

This, along with higher US interest rates this year, has sapped demand for the precious metal.

US gold futures were down 0.6% at $1,195.70. The dollar was up 0.2% against a basket of six major currencies, at 95.411.

Markets are now keeping a close eye on the Fed’s economic symposium in Jackson Hole, Wyoming, starting on Friday for any change in its stance, especially after US President Donald Trump’s attack on its monetary policy this week.