Gold slips to two-week low as investors favour dollar

Bengaluru — Gold fell to a more than two-week low on Monday as investors preferred the safety of the dollar, with the currency underpinned by robust economic reports out of the US, even as geopolitical risks and trade tensions persist.

Spot gold was down 0.2% at $1,274.51 an ounce at 10.25am GMT, having touched $1,273.22 for its lowest since May 3.

US gold futures edged 0.1% down at $1,274.50.

“The trend is bearish for gold. Money is going into equities and the dollar as well. Dollar remains a primary investment and, despite the fall in equities, there is no fear of a further fall, and that’s also attracting investments,” said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers.

The dollar index firmed near a two-week high, extending gains after strong US housing data and a report pointing to lower unemployment helped the US currency to mark its biggest weekly rise last week since early March.

Renewed US-China trade fears have also helped the dollar to mimic its trajectory from 2018, when it was preferred to gold as a perceived safe-haven asset.

Adding to the trade worries between the US and China, Google confirmed a Reuters report stating that it had suspended some business with Chinese tech giant Huawei.

In the Middle East, Iran was served a new warning by US President Donald Trump, who tweeted that if the country wanted to fight, that would be Iran’s “official end”.

But Trivedi noted that investment demand for gold had failed to pick up. “Even with geopolitical tension, no safe-haven demand has emerged,” he said.

On the technical front, gold’s break below key levels and failure to move above $1,300 is seen as a bearish sign, analysts said.

“For gold, $1,265 is now a critical support that must hold. A daily close below that region implies a much deeper correction could be imminent,” Oanda analyst Jeffrey Halley said in a note.

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.4% to 736.17 tonnes on Friday.

Hedge funds and money managers, meanwhile, raised their net long positions in Comex gold in the week to May 14, the US Commodity Futures Trading Commission said on Friday.

Among other metals, silver was steady at $14.39 an ounce, having touched a more than five-month low at $14.33.

Platinum rose 0.7% to $818.90 and palladium gained 0.8% to $1,320.43. 

Reuters