Gold slips towards one-year lows as dollar recovers

By Peter Hobson LONDON (Reuters) - Gold prices fell towards one-year lows on Monday as the dollar continued to strengthen against the currencies of key bullion consumers China and India. Gold has tumbled 10 percent since mid-April as a surge in the greenback made dollar-priced bullion more expensive for buyers with other currencies

Reuters July 24, 2018 00:05:49 IST
Gold slips towards one-year lows as dollar recovers

Gold slips towards oneyear lows as dollar recovers

By Peter Hobson

LONDON (Reuters) - Gold prices fell towards one-year lows on Monday as the dollar continued to strengthen against the currencies of key bullion consumers China and India.

Gold has tumbled 10 percent since mid-April as a surge in the greenback made dollar-priced bullion more expensive for buyers with other currencies.

There was some respite for gold last week when U.S. President Donald Trump branded the dollar's strength as bad for the economy, knocking the currency from one-year highs, but the breather proved short-lived.

"For gold to rise in a big way, we really need to see the dollar start to show some weakness," said Saxo Bank analyst Ole Hansen.

Spot gold was down 0.5 percent at $1,225.41 an ounce by 1441 GMT, close to last Thursday's low of $1,211.08, while U.S. gold futures for August delivery were down 0.5 percent at $1,225.50.

A war of words between Trump and Iranian President Hassan Rouhani helped to lift prices only briefly.

Trump, in a tweet, told Rouhani on Sunday to "NEVER, EVER THREATEN THE UNITED STATES AGAIN" after Rouhani said that hostile U.S. policies towards Tehran could lead to "the mother of all wars".

Geopolitical instability often boosts gold, traditionally seen as a safe place to invest in times of uncertainty.

Gold's plunge in recent months has led banks and brokerages to downgrade their average gold price forecasts for this year and next, according to a Reuters poll published on Monday.

But respondents still expect the metal to bounce back towards $1,300 an ounce.

One potential positive is a swing in speculative positioning that has seen funds' net short on the Comex exchange grow to its largest since January 2016.

"Such extreme positioning has frequently been an indicator of a pronounced countermovement in the near future," Commerzbank analysts wrote.

In 2016 the unwinding of the short position between January and July that year helped to drive up gold by more than $300 to a two-year high.

Gold is also cushioned by technical support around $1,200-$1,220, including its July 2017 low of $1,204.90, the 50 percent Fibonacci retracement of the 2016 rally and the psychologically significant level of $1,200.

Silver was down 0.4 percent at $15.41 an ounce after last week's drop to its lowest since July last year. Respondents to the Reuters poll forecast that silver would rebound and average $16.70 this year.

Platinum gained 0.1 percent to $827.40 an ounce after last week touching its lowest since 2008, while palladium rose from last week's one-year low and was up 1.4 percent at $906.48.

Prices of both metals are likely to recover, with platinum expected to average $922 an ounce this year and palladium to average $1,000, a Reuters poll found.

(Additiongal reporting by Karen Rodrigues in Bengaluru; Editing by Dale Hudson and David Goodman)

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

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

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

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

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.