Gold dips as dollar strengthens; palladium falls 3 percent
Gold slipped on Wednesday as a stronger dollar encouraged investors to reduce long positions in bullion despite global growth concerns, while palladium fell more than 3 percent as investors booked profits after a record run.
Spot gold gave back early gains and dipped 0.4 percent to $1,310.18 per ounce as of 11:05 a.m. EDT (1507 GMT). On Monday, prices had touched $1,324.32, the highest in more than three weeks.
U.S. gold futures were 0.4 percent lower at $1,314.10.
Gold had rallied as falling 10-year U.S. Treasury yields and weak Chinese data fed worries about an economic slowdown. An inversion between three-month and 10-year U.S. Treasury debt extended, feeding investor worries about a possible recession.
"The sudden selling looks like long liquidation after gold failed to rally in the face of sharply lower yields and the U.S dollar has been stubbornly bid," said Tai Wong, head of base and precious metals derivatives trading at BMO.
The U.S. dollar index was up 0.2 percent.
"The recent strength in the dollar index has been acting as a headwind to higher metal prices. Meanwhile, selling pressure has been consistent ever since gold and silver prices came off this week`s high of $1,324," Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, said.
Investors were watching for the latest round of China-U.S. trade negotiations in Beijing on Thursday, as well as an address by British Prime Minister Theresa May to Conservative lawmakers at 1700 GMT, possibly to set a timetable for her departure in a final bid to win support for her twice-rejected Brexit deal.
Spot gold has risen about 13 percent since August 2018 after the U.S. Federal Reserve indicated it would ease its monetary policy stance, pressuring the dollar. Last week, the Fed abruptly ended three years of monetary policy tightening amid signs of an economic slowdown.
Since then, the European Central Bank, Reserve Bank of Australia and the Bank of Japan have all turned dovish.
Meanwhile, palladium slid over 4 percent to $1,476 per ounce, after hitting a record high of $1,620.52 last week.
"Net longs have stayed steady in palladium for the better part of six months and this surprising retreat in gold seems to have triggered profit taking in palladium. It is a very illiquid market which magnifies the price moves," BMO`s Wong said.
Palladium has gained over 17 percent this year due to supply concerns and increasing demand for the autocatalyst metal.
Silver was down 0.9 percent at $15.28 per ounce, while platinum was marginally higher at $855.30.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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