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Gold prices inch down as dollar recovers from 3-week low

(7/11/2018 7:37:00 AM)

Gold prices gave up early gains to trade slightly lower on Tuesday as the US dollar recovered, while lingering US-China trade worries and political uncertainty over Brexit limited losses.

Spot gold was down 0.1 per cent at $1,256.79 an ounce, as of 0709 GMT, after touching its highest since June 26 at $1,265.87 (Dh4,649.54) in the previous session.

US gold futures for August delivery were 0.2 per cent lower at $1,257.40 an ounce. The main driver was the dollar, said National Australia Bank economist John Sharma.

The dollar’s index against a basket of six major currencies was up 0.04 per cent at 94.114 after dropping to its lowest since mid-June on Monday. Investors were also on the sidelines awaiting developments on the trade war between China and the United States, said Dick Poon, general manager, Heraeus Metals Hong Kong Ltd.

Last week, the world’s top two economies slapped tit-for-tat duties on $34 billion worth of each other’s imports. “Geopolitical issues such as Britain’s confused exit from the European Union and US President Trump’s assertion that China was impeding North Korean progress on denuclearisation have provided some support for gold,” said Sharma.

Trump suggested on Monday that China might be seeking to derail US efforts aimed at denuclearising North Korea. Britain’s ramshackle exit from the European Union could damage economic growth in the Eurozone, European Central Bank policymaker Ewald Nowotny said.

Prime Minister Theresa May’s foreign minister and Brexit negotiator quit on Monday in protest at her plans to keep close trade ties with the European Union after Britain leaves the bloc.

The departure of two key Euro-sceptic ministers raised worries about a “hard Brexit”. On the other hand, spot gold may drop to $1,247 per ounce, as it has completed a bounce from the July 3 low of $1,237.32, Reuters technicals analyst Wang Tao said.

Meanwhile, hedge funds and money managers raised their net long position in COMEX gold by 105 contracts to 4,291 contracts in the week to July 3, US Commodity Futures Trading Commission (CFTC) data showed on Monday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.18 per cent to 800.77 tonnes on Monday, its lowest since August 2017.

In other precious metals, silver was up 0.1 per cent to $16.08 an ounce. Platinum slipped 0.3 per cent to $844.50 per ounce and palladium fell 0.9 per cent to $951.95 an ounce.

Gulf News