Gold skids as greenback benefits from escalating trade worries

Gold prices have slipped about 10% from their April peak after investors turned to the dollar as a safe-haven, as the US-China trade war unfolded against a background of higher US interest rates.

On the technical front, gold was testing support at the 100-day moving average around $1,220.

“If we drop back below the 100-day moving average, speculators could be inclined to add short positions again after they slashed them massively in the last two to three trading weeks. There could be risk that we could drop towards $1,200 again,” said Commerzbank analyst Carsten Fritsch.

Also hurting bullion was a modest recovery in global stock markets, analysts said.

“We will see gold trend around this ($1,220-$1,230) range for some time, unless some major breakthrough takes place politically or in the financial/economic space,” said John Sharma, an economist with National Australia Bank (NAB).

Gold prices have gained about 3% in October and are on track to break a six-month losing streak, the longest since a downturn that ran from the start of August 1996 to the end of January 1997.

Investors’ inclination towards gold can be seen in the holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust, which rose to their highest in nearly two months, at 24.27-million ounces, on Monday.

In other precious metals, silver was down 0.2% at $14.42/oz, after hitting a near three-week low of $14.37 earlier.

Platinum was steady at $832/oz and palladium was down 0.1% at $1,087.90/oz. 

Reuters