Gold falls to sixth-month low

Bengaluru — Gold prices posted a six-month low on Thursday, pressed down further by a firm dollar and as the US Federal Reserve confirmed an outlook for higher interest rates in the US.

Spot gold fell 0.2% to $1,265.72/oz by 3.43am GMT. It hit its lowest since December 21 at $1,264.21 earlier, having lost nearly 2.8% over the past five sessions.

US gold futures for August delivery were down 0.5% at $1,267.50/oz.

“Precious metal [gold] is firmly in a downtrend and this is mainly due to the strength in the dollar index which is trading at a significant level,” said ThinkMarkets chief market analyst Naeem Aslam.

The dollar held near an 11-month high against a basket of currencies on Thursday, supported by a rise in US yields, while the pound struggled at its lowest level since November 2017 ahead of Bank of England’s (BoE’s) monetary policy decision.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

The dollar strength follows a remark from Fed chairman Jerome Powell on Wednesday and that was driving gold down, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.

Powell on Wednesday said the US jobs market did not appear overly tight and the Federal Reserve should continue with a gradual pace of interest rate rises to balance the bank’s employment and inflation goals in a strong economy.

Meanwhile, a developing trade war between the US and China is weighing on business confidence and could force central banks to downgrade their outlooks, some of the world’s most powerful monetary policy makers said on Wednesday at a meeting in Portugal of central bank heads.

Gold prices, which can benefit in times of uncertainty, failed to gain so far this week, despite the ongoing trade war.

Spot gold might drop to $1,258/oz, as a support at $1,268 did not seem to hold, said Reuters technicals analyst Wang Tao.

In other precious metals, silver fell 0.1% to $16.24/oz, having earlier revisited its low touched on May 16 at $16.17.

Platinum slid 0.6% to $862.15/oz. It touched $854.50, its lowest since February 3 2016 in the previous session.

Palladium was 0.2% lower at $962.20/oz. It hit a one-month low of $960.25 on Wednesday.

Reuters