Gold drops more than 1 percent as dollar strengthens during Fed testimony

By Renita D.

Reuters July 18, 2018 00:06:17 IST
Gold drops more than 1 percent as dollar strengthens during Fed testimony

Gold drops more than 1 percent as dollar strengthens during Fed testimony

By Renita D. Young and Maytaal Angel

NEW YORK/LONDON (Reuters) - Gold declined more than 1 percent and hit its lowest in a year on Tuesday as the U.S. dollar strengthened during testimony by U.S. Federal Reserve Chairman Jerome Powell to the U.S. Congress.

Powell offered an upbeat view of the U.S. economy in an appearance before the Senate Banking Committee, with markets expecting two more interest rate increases this year amid a continued economic expansion.

The dollar, in which gold is priced, gained against a basket of currencies during the testimony, making gold more expensive for non-U.S. investors.

"The dollar is really reacting to this 'goldilocks' effect of the economy and a slowly rising interest rate environment. That is usually a recipe for a stronger dollar," said David Meger, director of metals trading at High Ridge Futures in Chicago.

Higher interest rates make gold more expensive to own since bullion does not earn any interest or dividends, and costs money to store and insure.

Spot gold was 1.1 percent lower at $1,226.91 per ounce by 1:36 p.m. EDT (1736 GMT), having earlier hit its lowest since last July at $1,225.58. The metal is down more than 5 percent for the year.

U.S. gold futures for August delivery settled down $12.40, or 1 percent, at $1,227.30 per ounce.

The International Monetary Fund warned on Monday that escalating trade tensions following U.S. tariff actions threaten to depress medium-term growth prospects.

The comments came as China reported slower second quarter growth, though Beijing said that would not affect its 2018 growth target.

UBS economists lowered their estimates for Chinese growth to take into account trade war escalation.

"If China is slowing down, there will be consequences to global commodity consumption and that's going to drag gold down as well," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.

"Chinese gold ETF liquidity has dropped a lot these days so that means people do not see any major breakthrough in either direction," Xu added.

Demand for gold in top-consumer China has been weak as an ongoing trade dispute with United States has weakened the local currency.

Spot gold could break support levels at $1,220 and the psychologically-important $1,200, said Josh Graves of RJO Futures.

Silver fell 0.9 percent to $15.60 an ounce, dipping to $15.51, its lowest since July 2017.

Platinum fell 1.2 percent to $812 an ounce, hitting a two-week low at $808.89. Palladium fell 0.4 percent to $913.50 per ounce, sliding to $905.05, its lowest since April 9.

(Additional reporting by Apeksha Nair in Bengaluru; Editing by Alexandra Hudson and Steve Orlofsky)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Oil rises 2% as OPEC complies with production cuts
Business

Oil rises 2% as OPEC complies with production cuts

By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut

Tesla's back-to-back price cuts bring sticker on U.S. Model S below $70,000
Business

Tesla's back-to-back price cuts bring sticker on U.S. Model S below $70,000

By Tina Bellon and C Nivedita (Reuters) - Tesla Inc will further cut the price of its Model S "Long Range" sedan in the United States to $69,420, the electric carmaker's chief executive, Elon Musk, announced in a tweet https://bit.ly/2H0JCP0 on Wednesday. The anticipated drop marks the second time this week Tesla has cut the price for the high-end sedan, following a 4% cut of the Model S's price in the United States on Tuesday to $71,990.

Trump cites teenaged son's bout with coronavirus in calling for schools to reopen
World

Trump cites teenaged son's bout with coronavirus in calling for schools to reopen

By Jeff Mason DES MOINES, Iowa (Reuters) - Under siege over his handling of the novel coronavirus pandemic, President Donald Trump on Wednesday cited what he said was his son's mild bout of the virus as a reason why American schools should reopen as soon as possible. Trump made the comment about his son, Barron, as the president swept into Iowa on a mission to shore up support in battleground states that he won in 2016 but is in danger of losing to Democrat Joe Biden barely three weeks before the election. First lady Melania Trump announced in a statement earlier in the day that the virus that struck both her and her husband had also infected their 14-year-old son