Gold stays close to one-year low in the face of a strong dollar

Bengaluru — Gold prices held steady near a one-year low on Friday amid a resilient US dollar and were headed for a fourth consecutive weekly fall.

Spot gold was unchanged at $1,207.97/oz at 3.30am GMT, after earlier dropping to the lowest since July 2017 at $1,205.95. For the week, the precious metal was down about 1.3%.

US gold futures were 0.3% lower at $1,216.20/oz on Friday.

“Support for gold disappeared as a stronger US dollar weighed on investor appetite. Gold prices fell below $1,210/oz and now appear destined to break below the key psychological barrier of $1,200/oz in the coming days,” ANZ analysts said in a note.

The dollar climbed to a two-week high against a basket of major currencies and stayed firm against the yuan as concern about an escalation in trade tensions between the US and China supported the US currency. The greenback was also supported by strong US economic data and outlook for higher interest rates. Higher US rates tend to boost the greenback, in which the metal is priced.

“The most recent data suggests continued weakness for gold amid a stronger US dollar index,” said John Sharma, an economist at National Australia Bank. “The only reason I can think of Asia having a higher price is due to opportunistic buying at the dips by Asian investors in China and elsewhere.”

Meanwhile, Asian stocks were under pressure from the latest exchange of trade threats between Beijing and Washington.

China vowed on Thursday to retaliate if the US acted on a threat to raise tariffs on the Asian nation’s exports, fuelling the fear in financial markets that the trade war between the world’s two biggest economies would escalate.

Elsewhere, the Bank of England (BoE) pushed interest rates above their financial crisis lows on Thursday, but signalled it was in no hurry to raise them further as Britain heads for Brexit next year with no clear plan for leaving the EU.

Among other precious metals, silver fell 0.3% to $15.26/oz, platinum was unchanged at $822.15/oz and palladium edged up 0.1% to $912.47/oz.

All three precious metals were, however, headed for weekly losses.

Reuters