Gold hovers near six-month lows as investors flock to U.S. Treasuries

Gold hovers near six-month lows as investors flock to U.S. Treasuries

By Renita D. Young and Zandi Shabalala

NEW YORK/LONDON (Reuters) - Gold hovered near last week's six-month low on Monday as investors flocked to U.S. Treasuries rather than bullion, amid concerns over a global trade war ratcheting higher after a report said the United States plans to bar Chinese companies from investing in its technology firms.

Spot gold was down 0.2 percent at $1,266.29 per ounce by 1:35 p.m. EDT (1735 GMT).

U.S. gold futures for August delivery settled down $1.80, or 0.1 percent, at $1,268.90 per ounce.

Palladium was down 2 percent at $937.70 an ounce. The metal earlier slipped to $936.25 an ounce, its lowest since April 10.

The U.S. Treasury Department is crafting rules that would block firms with at least 25 percent Chinese ownership from buying U.S. companies involved in "industrially significant technology," The Wall Street Journal reported on Sunday.

Gold, which is traditionally seen as a safe haven in times of geopolitical uncertainty, has failed to benefit as investors poured into U.S. Treasury debt.

"Right now, the flight-to-quality money is going into the bonds," said Bob Haberkorn, senior market strategist at RJO Futures. "Commodities on a whole are being pulled back with the threat of tariffs."

The U.S. Treasury yield curve flattened to its lowest level in over 10 years as concerns about trade wars and divisions within the euro zone boosted demand for longer-dated, safe-haven debt.

Higher U.S. bond yields make gold a less attractive investment since it does not bear interest.

But some analysts say the standoff between the world's two largest economies, which threatens to limit global economic growth, could eventually benefit gold.

Danske Bank analyst Jens Pedersen there was a risk-off mood in the commodities space on Monday.

"Today on a relative basis, gold is performing better than commodities and equities," he added.

Global shares fell on escalating trade tensions and the dollar index turned softer against a basket of currencies.

"The fundamental dynamics suggest gold will remain under pressure until there is a discernible reversal in dollar sentiment," said Peter Hug, Global Trading Director at Kitco Metals.

"We are seeing some support lining up at the $1,265 level, with upward momentum capped at the $1,278 area," he said.

Meanwhile, silver fell 0.8 percent at $16.31 an ounce.

Platinum lost 0.7 percent to trade at $867.20 an ounce. It touched $851.74, the weakest since February 2016, in the previous session.

(Additional reporting by Karen Rodrigues in Bengaluru; Editing by Jan Harvey)

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

Updated Date: Jun 26, 2018 00:05 AM

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