Gold loses ground on stronger dollar

Bengaluru — Gold prices inched down on Wednesday as the dollar firmed, but the metal remained near a two-week peak hit in the previous session as equities slipped on concerns over global growth and trade tensions between the US and Europe.

Spot gold was down 0.1% at $1,302.02/oz at 03.28 GMT, after touching its highest since March 28 at $1,306.09/oz the session before.

US gold futures slipped 0.2% to $1,306/oz.

While the dollar gained about 0.1% against key rivals, a slip in Asian equities from eight-month highs kept bullion underpinned above the key $1,300/oz level.

A strong US dollar makes gold costlier for investors holding other currencies.

“There is some switch from equities to gold after US President Donald Trump voiced his intention to impose tariffs on imports from the EU and the market had some concerns on the economic slowdown which was also reported by the IMF,” said Argonaut Securities analyst Helen Lau.

Trump on Tuesday threatened to impose tariffs on $11bn worth of EU products, opening a new front in his global trade war.

Adding to investor concerns, the IMF on Tuesday slashed its global economic growth forecasts for 2019 and warned growth could slow further.

Gold is used as a safe investment during times of political and financial uncertainty.

“Gold accumulated enough momentum to break above $1,300 and if US economic indicators continue to disappoint, the yellow metal could end up higher near the end of the week,” Alfonso Esparza, senior market analyst at Oanda, said in a note.

“The yellow metal will continue to be bid as the Brexit drama and trade stories unfold at the same time that major central banks continue their dovish rhetoric.”

Investors now await the release of the Federal Open Market Committee meeting’s minutes from its March meeting and the European Central Bank’s policy decision, both due later in the day.

Lower interest rates reduce the opportunity cost of holding non-yielding gold and also weigh on the dollar.

Meanwhile, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the seventh consecutive session, dropping about 0.4% to 757.85 tons on Tuesday.

Among other precious metals, spot platinum gained about 0.4% to $890.12/oz. The metal had touched its highest since May 2018 at $914.74/oz on Monday.

Palladium was down 0.3% at $1,384.65/oz, while silver dropped 0.4% to $15.15/oz.

Reuters