October 30, 2018 / 10:47 AM / 14 days ago

PRECIOUS-Gold slips to near 2-week low as trade war tensions boost dollar

* Dollar gains on report that U.S. preparing more Chinese tariffs

* Holdings in SPDR Gold Trust rise to highest in 2 months

* Gold on track to post biggest monthly gain since Jan

* Silver eases to lowest in nearly three weeks (Updates prices)

By Swati Verma

BENGALURU, Oct 30 (Reuters) - Gold slipped on Tuesday as the dollar benefited from concerns about an escalating trade dispute between the United States and China, leaving the metal near key technical levels that might prompt fresh speculative bets for prices to fall further.

Spot gold was down 0.3 percent at $1,225.97 an ounce at 1344 GMT, having earlier touched $1,219.37, its lowest since Oct. 18. U.S. gold futures were steady at $1,227.70 an ounce.

The dollar rose to a 2-1/2 month high versus a basket of other major currencies after Bloomberg reported Washington was preparing to announce tariffs on all remaining Chinese imports by early December if talks next month between U.S. President Donald Trump and Chinese President Xi Jinping fail to ease the trade war.

“The dollar’s appreciation is not helping gold and the general movement down appears to be related to increased speculation about further moves by the Trump administration in relation to tariffs,” said Capital Economics analyst Ross Strachan.

Gold prices have slipped around 10 percent from their April peak after investors turned to the dollar as a safe-haven, as the U.S.-China trade war unfolded against a background of higher U.S. interest rates.

A firmer dollar makes gold more expensive for holders of other currencies.

On the technical front, gold was testing support at the 100-day moving average around $1,220.

“If we drop back below the 100-day moving average, speculators could be inclined to add short positions again after they slashed them massively in the last 2-3 trading weeks. There could be risk that we could drop towards $1,200 again,” said Commerzbank analyst Carsten Fritsch.

Gold prices have gained about 2.8 percent this month and are on track to break a six-month losing streak, the longest since a downturn that ran from the start of August 1996 to the end of January 1997.

“Recession worries have increased recently. Going forward a falling unemployment rate in the U.S. and continued trade tensions should keep these concerns elevated,” Goldman Sachs said in a note.

The bank said it expects a slowdown in U.S. growth and a pick-up in U.S. core inflation, which could make the U.S. economy look increasingly like it is entering a late-cycle inflation overshoot and further support gold investment.

Investors’ inclination towards gold can be seen in the holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust, which rose to their highest in two months, at 24.27 million ounces, on Monday.

In other precious metals, silver rose 0.4 percent at $14.51 per ounce, after hitting a near three-week low of $14.33 earlier.

Platinum gained 0.8 percent at $838.60 per ounce, and palladium was down 0.5 percent at $1,083.34 per ounce. (Reporting by Swati Verma in Bengaluru; Editing by Mark Potter and Hugh Lawson)

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