Gold slips as emerging-market worries buoy dollar

Bengaluru — Gold prices inched down on Tuesday as the dollar hit a one-week high due to intensifying global trade tensions and economic worries in emerging markets.

Gold prices are down about 8% so far in 2018 amid rising US interest rates, trade disputes and the Turkish currency crisis, with investors parking their money in the dollar, which is being viewed as a safe-haven asset.

Spot gold was down 0.1% at $1,199.20/oz at 3.47am GMT, while US gold futures had dropped 0.1% to $1,205/oz.

“The emerging-market economic crisis is making currencies very weak and benefiting the dollar, which continues to pressure gold,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

The dollar index, which measures the greenback against a basket of currencies, was up 0.1% at 95.182.

A firmer US dollar makes gold more expensive for holders of other currencies, with safe-haven demand for gold in 2018 overshadowed by the metal’s relationship with the greenback.

“Gold should track the dollar’s movement very closely and interest rate expectations too are weighing on the metal,” Fung said.

Markets are closely watching US economic data, including a manufacturing survey on Tuesday and an employment report on Friday, which could influence gold’s moves as investors look for clues on the pace of US interest rate increases.

Meanwhile, worries over an escalation in trade conflicts between the US and other countries have kept participants in broader markets on edge.

“With all the noise building around the trade dispute, along with unsettling economic prospects for Turkey and Argentina that will likely drag on more emerging market economies … gold should be in demand,” said Stephen Innes, Asia-Pacific trading head at Oanda.

After a 16% slide in the peso last week, Argentinian President Mauricio Macri on Monday announced new taxes and steep cuts to spending in an “emergency” bid to balance the country’s 2019 budget.

Meanwhile, Turkey’s central bank signalled on Monday that it would take steps to combat “significant risks” to price stability, comments seen as hinting at interest rate hikes.

Spot gold might fall to $1,190/oz, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.

Spot silver dropped 0.2% to $14.43 on Tuesday, after falling to a more than two-week low at $14.37 on Monday.

Platinum was up 0.4% at $786.70, while palladium was down 0.1% at $977.50, after hitting an 11-week high of $985.50 on Monday.

Reuters