Gold flat as strong dollar offsets global stocks selloff

Gold prices were steady on Tuesday as pressure from a stronger dollar and a higher U.S. interest rate outlook were balanced by risk aversion and stock markets sold off around the globe.

Spot gold was unchanged at $1,187.71 per ounce as of 1616 GMT. Prices fell 1.2 percent the previous session, marking bullion`s biggest one-day percentage decline since mid-August.

U.S. gold futures rose 0.2 percent to $1,191.30.

"The selling interest is being limited by the shaky stock market worldwide and strength of the dollar is limiting the upside," said Kitco Metals senior analyst Jim Wyckoff.

Against a basket of major currencies, the greenback hit a seven-week high, boosted by rising U.S. bond yields.

European stocks were sucked back into the red as a four-day global selloff took Asia to a 17-month low and left Wall Street on course to equal its longest losing streak of the year.

Separately, the International Monetary Fund cut its global economic growth forecast for the first time since 2016, citing pressure from trade tussles between the United States and China.

Gold has held in a $34 range for the last 1-1/2 months, which some analysts say suggests resilience, supported by concerns over economic growth in emerging markets and inflationary pressure from soaring oil prices.

Others said physical buying would emerge at lower price levels.

However, the metal, traditionally considered a prudent store of value during political and economic uncertainty, has lost much of its safe-haven appeal this year with investors increasingly opting for the greenback instead, especially as the U.S.-China trade war unfolded and on rising U.S. interest rates.

Higher interest rates boost the dollar and push bond yields up, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

The Fed increased interest rates last month for the third time this year and is widely expected to hike again in December, with no suggestion its tightening policy will end any time soon.

Among other precious metals, spot silver rose 0.3 percent to $14.39 per ounce. Platinum climbed 0.9 percent to $824.90 per ounce and palladium inched 0.1 percent higher to $1,075.50.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)