June 27, 2018 / 11:08 AM / 5 months ago

PRECIOUS-Gold extends downward trend as dollar remains strong

    * Gold down more than 3 pct this month
    * Technical indicators suggest further falls
    * Dollar near 2018 highs
    * Platinum lowest since February 2016

 (Updates prices, headline; adds comment, byline, NEW YORK to dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, June 27 (Reuters) - Gold prices dipped to a fresh six-month
low on Wednesday as the U.S. dollar strengthened, making bullion more expensive
for buyers using other currencies.
    Platinum also hit its lowest level since February 2016.
    Gold prices have shed more than 3 percent this month - the biggest monthly
loss since September - driven by a dollar rally, a large decline in gold held by
exchange-traded funds and a sharp fall in speculative bets.
    Spot gold        declined 0.3 percent at $1,255.17 per ounce by 1:35 p.m.
EDT (1735 GMT), after hitting its lowest since mid-December at $1,252.04.
    U.S. gold futures         for August delivery settled down $3.80, or 0.3
percent, at $1,256.10 per ounce.
    Platinum        lost 0.9 percent to trade at $857.40 per ounce after
touching a more than one-year low at $848.50.
    "The main focal point of the day will be the dollar and its pressure on
gold," said David Meger, director of metals trading at High Ridge Futures.
    Technical indicators suggest gold will continue to fall, said analysts at
ScotiaMocatta, with support at the psychologically-important level of $1,250
then at $1,236.60, gold's December low.
    An escalating trade dispute between the United States and China has hit
global stock markets, but has so far not triggered demand for gold, usually seen
as a safe haven to invest during times of uncertainty.                          
           
    The greenback is near 2018 highs against other currencies, in part due to
expectations that the U.S. Federal Reserve will hike interest rates again after
raising them in June for the second time this year.       
    Higher rates typically lift the dollar and U.S. bond yields, pressuring
gold, which is priced in dollars and does not offer a yield.
    The head of the Dallas Federal Reserve said the U.S. central bank could
raise rates at least twice more before its monetary policy stopped being
accommodative, while the chief at the Atlanta Fed said he might rule out a
fourth rate hike this year if the U.S.-China trade dispute worsens.             
            
    A fall in holdings by gold-backed exchange traded funds tracked by Reuters 
                also pressured gold.             
    But gold could rebound if investment funds that have trimmed net long
positions in COMEX gold to the lowest in 2-1/2 years decide prices have
bottomed, according to Julius Baer analyst Carsten Menke.             
    "Usually this kind of pretty bearish position reverses rather quickly,"
Menke said, adding that gold had likely already fallen too far.
    Meanwhile, spot silver        dropped 0.5 percent to $16.17 an ounce, while
palladium        declined 0.9 percent at $948.40.

 (Additional reporting by Karen Rodrigues in Bengaluru; editing by Alexandra
Hudson and Louise Heavens)
  
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