August 2, 2018 / 11:04 AM / in 19 days

PRECIOUS-Gold falls to 1-year low as the U.S. dollar marches higher

    * Trade tensions, Fed comments boost dollar
    * Gold down 11 pct since April
    * Technicals support gold above $1,200
    * Bank of England raises interest rates

 (Updates prices)
    By Marcy Nicholson and Peter Hobson
    NEW YORK/LONDON, Aug 2 (Reuters) - Gold inched down to the
lowest price in over one year on Thursday after an upbeat
assessment of the U.S. economy by the Federal Reserve and new
trade tensions between Washington and Beijing boosted the
dollar. 
    "The belief is that there will be real and honest
negotiation between USA and China," said Miguel Perez-Santalla,
vice president of Heraeus Metal Management in New York, in a
note.
    "Hence with the economy humming along and interest rate
hikes guaranteed in the future (based on) the Fed announcement
yesterday, the gold price will stay depressed."
    Gold has slumped 11 percent since April, as rising U.S.
interest rates and the perception that trade wars will damage
the United States less than other nations pushed the dollar
higher.                                 
    The stronger dollar hurts gold because it makes bullion more
expensive for buyers with other currencies. Higher bond yields
meanwhile make non-yielding gold less attractive to investors.
    With the U.S. dollar        up nearly 0.5 percent against a
basket of currencies, spot gold        was down 0.3 percent at
$1,211.81 an ounce by 1:53 p.m. EDT (1753 GMT) after falling to
$1,210.80, the lowest since July 2017.
    "We are in territory - $1,200-$1,220 an ounce - where we
should start to bottom out," said ABN AMRO analyst Georgette
Boele. 
    U.S. gold futures         for December delivery settled down
0.6 percent at $1,220.10 an ounce.
    Momentum indicators suggest prices will continue to fall,
according to analysts at ScotiaMocatta, and gold has not yet
snapped a steep downtrend line from mid-June. 
    Adding to the pressure on bullion are expectations that the
Federal Reserve will raise interest rates again in September. 
    Those expectations were bolstered on Wednesday by the Fed,
which praised the strength of the U.S. economy, and
forecast-beating employment data on Wednesday and Thursday.
                                      
    Higher interest rates are a source of pressure for gold
because they push up bond yields and tend to boost the dollar. 
    Gold could fall to $1,200 ahead of a September rate
announcement, Natixis analyst Bernard Dahdah said. 
    But after that, tightening monetary policy elsewhere could
begin to push the dollar lower and help gold recover to above
$1,300 next year, he said. 
    The Bank of England raised interest rates while the European
Central Bank also intends to wind down its stimulus measures.
            
    In other precious metals, silver        was up 0.03 percent
at $15.35 an ounce. 
    Miner Impala Platinum's          announcement to slash about
a third of its workforce supported platinum and palladium
prices, traders said.             
    Platinum        rose 1.3 percent to $822.24 an ounce and
palladium        was 0.3 percent higher at $916.80 an ounce.

 (Additional reporting by Apeksha Nair in Bengaluru, editing by
Jon Boyle and Diane Craft)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below