Gold pares losses from 19-month low as US dollar softens on reports of Beijing to hold talks with Washington

Spot gold was down 0.2 percent at $1,172.48 an ounce as of 0426 GMT, after earlier falling as much as 1.2 percent to $1,159.96, its lowest since January 2017.

Reuters August 16, 2018 12:21:31 IST
Gold pares losses from 19-month low as US dollar softens on reports of Beijing to hold talks with Washington

Bengaluru: Gold pared heavy early losses that came in the midst of a broad commodity sell-off on Thursday, bouncing off of a 19-month low on short covering and a softer US dollar following news that Beijing will hold trade talks with Washington this month.

Spot gold was down 0.2 percent at $1,172.48 an ounce as of 0426 GMT, after earlier falling as much as 1.2 percent to $1,159.96, its lowest since January 2017.

US gold futures were down 0.5 percent at $1,179.5 an ounce.

Stop-loss selling early in the session pushed prices sharply lower, and it has recovered since on short-covering and physical buying, said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Bullion has lost its appeal as a safe haven over the past few months as investors have preferred to park assets in US Treasuries and dollar amid the uncertainty caused by the China-US trade dispute.

The dollar was nudged away from a 13-month peak on Thursday, though, as risk aversion eased and emerging market currencies recovered on news that a Chinese delegation will travel to the United States late in August for trade talks.

Gold pares losses from 19month low as US dollar softens on reports of Beijing to hold talks with Washington

Representational image. Reuters.

Asian shares also pulled away from one-year lows after news of the trade talks, although Turkey’s currency crisis and fears of an economic slowdown in China kept most markets in the red.

In an ongoing dispute with Turkey, which has roiled financial and currency markets, the United States on Wednesday ruled out removing steel tariffs, even if Ankara frees a US pastor, as Qatar pledged $15 billion in investment to Turkey, supporting a rise in the Turkish lira.

Some emerging market countries pared their holdings of US Treasuries in June, data from the US Treasury department showed on Wednesday, in what analysts viewed as a move to support their currencies as the Federal Reserve started raising interest rates this year.

Higher US rates tend to boost the dollar and bond yields, adding pressure on greenback-denominated, non-yielding gold.

Spot gold may break a support at $1,162 per ounce and fall further into a range of $1,142-$1,154, Reuters technicals analyst said.

In other precious metals, spot silver rose 0.1 percent at $14.44 an ounce after earlier hitting the lowest since February 2016 at $14.30.

Platinum was 0.8 percent higher at $769.40, after earlier sinking to its lowest since October 2008 at $751.25.

Palladium rose 0.5 percent at $846.47 an ounce, having hit an over 13-month low at $834.50, earlier.

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