Dubai gold prices fall as investors turn to dollar for safety

Cornelia Mascio
Settembre 19, 2018

Gold prices fell on Tuesday as the dollar firmed after China said it would retaliate against a new round of USA tariffs on its goods, intensifying tensions between the world's two largest economies. U.S. Treasuries also rose, helping boost the dollar but pressuring gold.

U.S. President Donald Trump said he was imposing 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.1 percent.

Although gold is presumed to be a safe-haven asset, the months-long trade rift between Washington and Beijing has prompted investors to buy USA dollars in the belief that the United States has less to lose from the dispute.

Gold prices on Comex are seen struggling to extend their recovery beyond the $ 1200 barrier, as the bulls lack vigor ahead of the looming USA tariffs announcement on China, which is likely to refuel the latest United States dollar pull back across its main competitors.

Spot gold had climbed 0.1 percent to $1,199.18 an ounce by 0044 GMT. USA gold futures for December delivery fell $3.30, or 0.3 percent, at $1,202.50.

Gold prices have declined more than 12 percent since April, hurt by the intensifying trade dispute between the United States and China and as rising US interest rates diminished demand for non-interest-bearing bullion.

"I think there's a secondary factor where higher rates and real rates are helping lift the dollar and that's putting pressure on gold", said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management. "Since the priced-in forecast for a December rate hike to follow the one this month has firmed despite soft US data, this might ultimately lead the dollar higher and gold lower", said Ilya Spivak, a currency strategist for Dailyfx.

Investors were eyeing a meeting by the U.S. Federal Reserve next week at which interest rates are widely expected to be raised, said ActivTrades chief analyst Carlo Alberto De Casa.

Gold prices were "hovering below massive resistance between $1,205-$1,215 range", said analyst Fawad Razaqzada, pointing out that gold was still in a bearish trend.

The number of net-short positions held by money managers in Comex gold futures are near their highest ever, according to data from the US Commodity Futures Trading Commission.

"Gold is facing a couple of headwinds".

"The speculative positioning in gold is down to its lowest levels since 2001. gold is not behaving like the haven that it is supposed to be".

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.04 percent to 742.23 tonnes on Tuesday.

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