Gold down, platinum plunges to lowest since 2016 on stronger dollar
Gold fell to a near six-month low and platinum hit its lowest since February 2016 on Wednesday as a stronger greenback was overwhelmed by safe-haven buying, spurred by fears of a trade war between the world`s two top economies.
The U.S. dollar index <.dxy> touched its highest since July 2017 against a basket of currencies, as U.S. President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing said it would retaliate.
The trade spat reinforced concerns about global growth and triggered a selloff in equities, while boosting safe-haven currencies such as the yen and the dollar. [USD/] [MKTS/GLOB]
Typically, gold is used by investors as a place to park assets during times of global uncertainty.
But the dollar`s inverse relationship with bullion - a stronger greenback makes dollar-denominated assets more expensive for holders of other currencies - can often override other factors.
"In these environments, the Treasuries and dollars would tend to be safe havens," said TD Securities` Bart Melek. "Gold would tend to be as well, though you had a big jump in the dollar, so that pressures gold."
U.S. gold futures
"Platinum is coming off with gold (and stocks)," said Patrick Magilligan, director of metals marketing for Key Metal Refining.
The rising prospect of further U.S. Federal Reserve interest rate increases placed further pressure on gold. U.S. homebuilding surged to near an 11-year high in May.
Rate hikes would limit gold because they make non interest-bearing commodities less attractive to investors.
Other market watchers said gold prices fell to technical selling.
"Momentum selling accelerated through the lows as weak technicals (for now) outweighs a supporting macro environment (stocks, yields down, Japanese yen up)," said Saxo Bank analyst Ole Hansen.
Gold prices broke below the May low at $1,281.76 per ounce, then the lows from the last couple of days, and continued selling off, Key Metal Refining`s Magilligan added.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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