Gold steadies as soaring dollar offset by global trade woes
Gold steadied near a six month low on Wednesday as a dollar rally to 11 month peaks was offset by festering global trade tensions, while platinum hit a 2-1/2 year trough.
Trade tensions between the United States and China are showing no signs of easing. On Tuesday, a White House trade adviser said that Beijing has underestimated the U.S. president`s resolve to impose more tariffs.
This was after Washington threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods after Beijing decided to raise tariffs on $50 billion of U.S. goods in response to similar tariffs on Chinese goods announced Friday.
Gold, seen as a safe haven asset, usually gains from geopolitical or economic tensions, but has struggled this time around because the dollar has risen strongly, making dollar-priced gold costlier for non-U.S. investors.
"Gold is not in a good position with the (Federal Reserve) hiking (rates) and the dollar strengthening, but the reason it hasn`t fallen as much as you`d expect is that safe haven demand has sustained the price," said Capital Economics analyst Simona Gambarini.
Spot gold was flat at $1,273.81 an ounce, as of 1230 GMT. The metal fell to its lowest since Dec. 22 at $1,270 an ounce on Tuesday.
U.S. gold futures for August delivery were down 0.2 percent at $1,276.10 per ounce.
In the wider markets, equities stabilised after Tuesday’s plunge on U.S.-China trade war woes, with signs of Chinese market support and speculation about some monetary policy easing there helping a rebound in Shanghai.
Rising equities tend to indicate more appetite for riskier investments and can weigh on safe havens like gold.
Platinum declined 0.5 percent to $862.90 an ounce. Earlier in the session, it touched $854.50, its lowest since February 3, 2016.
Julius Baer said in a note that platinum remains under pressure from trade tensions and related fears of a slowdown in global growth, but added it does not see further downside at these levels.
"Platinum still suffers from the diesel emission scandal and faces a depreciating South African rand, which lowers dollar-denominated costs (for) South African producers. While the market should remain well supplied against this backdrop, we believe this is reflected in extremely negative sentiment in the futures market. Hence, we maintain a neutral view."
Silver dipped 0.2 percent at $16.25 an ounce, having a one month low of $16.21 hit in the previous session. Palladium was flat at $966.68, having hit a one month low of $963.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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