Gold prices dive as dollar rallies on market concerns
Temitayo Ayetoto is Businessamlive Reporter.
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Gold prices dived on Tuesday as the dollar rallied to more-than-one-week high on the back of intensifying global trade tensions and economic worries in emerging markets.
The precious metal was eight percent down this year amid rising U.S. interest rates, trade disputes and the Turkish currency crisis, with investors converting their monies in the dollar viewed as a safe-haven asset.
Spot gold was down 0.3 percent at $1,196.90 an ounce, while U.S. gold futures dropped 0.4 percent at $1,202.10 an ounce.
According to Peter Fung at Wing Fung Precious Metal in a monitored report, “the emerging market economic crisis is making currencies very weak and benefiting the dollar, which continues to pressure gold”.
The dollar index, which measures the greenback against a basket of currencies, hit its highest since Aug. 24.
“Gold should track the dollar’s movement very closely and interest rate expectations too are weighing on the metal,” Fung added.
A firmer U.S. dollar makes gold more expensive for holders of other currencies, with safe-haven demand for gold this year overshadowed by the metal’s relationship with the greenback.
Markets are closely watching U.S. economic data, including a manufacturing survey on Tuesday and an employment report on Friday, which could influence gold’s moves this week as investors look for clues on the pace of U.S. interest rate increases.
Meanwhile, worries over an escalation in trade conflicts between the United States and other countries have kept participants in broader markets on the edge.
Spot gold may fall to $1,190 per ounce, as suggested by its wave pattern. Vandana Bharti, assistant vice president, commodity research at SMC Comtrade Ltd said “gold and silver should bottom out at the current level as they should attract physical buying amid ongoing festival season in India. Dull economic activities may result in some safe haven buying in China. Gold should trade (for near term) in a range of $1,190-$1,220, above that we may see prices rising further to $1,237.”
Spot silver was down 0.4 percent to $14.40 on Tuesday, after falling to an over-two-week low at $14.35.
Platinum was up 0.3 percent at $785.70, while palladium was down 0.5 percent at $973.90, after striking an 11-week high of $985.50 on Monday.