Gold slips amid US-China trade war concerns

12th September 2018

By: Reuters

  

Font size: - +

LONDON – Gold fell on Wednesday, but remained stuck in a narrow trading range as investors worry about a simmering trade war between the United States and China.

Spot gold was down 0.3% to $1 193.61 an ounce at 1200 GMT, after hitting its lowest since Aug. 24 at $1 187.21 on Tuesday. US gold futures eased 0.3% to $1 198.40 an ounce.

The trade conflict between Washington and Beijing has prompted investors to buy the US dollar in the belief that the United States has less to lose from the dispute.

"It looks like gold will remain in a sideways trend until something forces it either way," said Commerzbank analyst Daniel Briesemann, adding that given the uncertainty in the world "gold will go much higher before the year is out."

Gold has been stuck in a $20 price range over the past two weeks, with investors looking for technical breakouts for clues on further movements.

Gold has lost out to the dollar in a battle for safe-haven flows. A firmer dollar makes gold more expensive for holders of other currencies but on Wednesday the dollar was marginally lower against a basket of currencies.

It touched a three week high of 95.74 last week.

In addition, a sell-off in the Chinese yuan made the metal more expensive for buyers from the world's top consumer of the metal.

"Gold is moving without a clear direction and it seems locked between $1 190 and $1 200," said ActivTrades chief analyst Carlo Alberto De Casa.

"Investors are awaiting new moves to see if bullion can prolong the weak recovery seen in the second half of August, even if the main trend still appears bearish."

The US central bank is widely expected to raise benchmark interest rates at its September meeting and expectations are growing for one more hike in December on positive economic data.

Higher rates increase bond yields, making non-yielding bullion less attractive, and tend to boost the dollar.

Central bank meetings in Turkey and Russia this week are also on investors' radar, with particular market focus on whether Ankara will step in to fight inflation and a depreciating currency, Commerzbank's Briesemann said.

Gold has fallen over 12% from a peak in April, pressured by rising US interest rates amid intensifying global trade tensions.

Spot silver was down 0.2% at $14.06 per ounce, having touched $13.90 in the previous session, its lowest since January 2016.

Platinum was down 0.5% to $783.98 per ounce, while palladium lost 0.2% to $972 an ounce.

Edited by Reuters

Comments

The functionality you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION