Gold prices drop, could slide further as dollar continues to rise

Gold prices dropped on Tuesday, as the dollar rose on the expectation of a US interest rate increase later this month, amid fears of China-US trade war escalation.

Spot gold was down 0.2% at $1,193.07 an ounce at 2.58am GMT. US gold futures were mostly steady at $1,199.60 an ounce.

A fresh wave of US Dollar buying interest emerged following the latest trade-related headlines and was seen as one of the key factors exerting some downward pressure on the dollar-denominated commodity.

According to the WTO meeting agenda, China has asked for authorization to impose trade sanctions on the US and added fuel to the recent trade spat between the world’s two largest economies.

The greenback was further supported by a positive tone surrounding the US Treasury bond yields, which tends to drive flows away from the non-yielding yellow metal.

Meanwhile, the prevalent risk-off mood did little to boost the precious metal’s safe-haven demand and stall the ongoing slide, albeit might help limit further sharp declines, at least for the time being.

Gold prices have been trading within a $20 range for the past 10 sessions.