Gold drops more than 1 percent as dollar strengthens during Fed testimony
By Renita D.
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.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.