Gold drops to more than 2-week low as dollar and equities gain

WASHINGTON: Gold prices slipped to a more than two-week low on Tuesday, as the dollar strengthened and improved risk appetite took the sheen off bullion ahead of the release of minutes from the US Federal Reserve’s latest policy meeting.
Spot gold fell 0.4pc to $1,272.56 an ounce at 1153 GMT, having touched its lowest since May 3 at $1,271.11.
US gold futures also lost 0.4pc , dropping to $1,272.20.
“Right now the only safe-haven out there seems to be the dollar, which has been moving higher against most currencies,” said Saxo Bank commodity strategist Ole Hansen.
“Also, there has been a slight improvement in the outlook for the stock markets after the US decided to provide Huawei with a 90-day reprieve.”
Both factors were weighing on gold, he added.
The dollar index rose to its strongest in nearly a month, boosted by higher US yields and as fears of the economic fallout from the U.S-China trade row prompted investors to choose the safety of the US currency over bullion.
This pointed to a repeat of a similar trend last year when the dollar emerged as the go-to hedge against the simmering trade war, stemming flows into gold.
Stocks markets, meanwhile, gained after Washington temporarily eased trade restrictions imposed on China’s Huawei.
On Monday the US Commerce Department granted Huawei a licence buy US goods until Aug. 19 to maintain existing telecoms networks and provide software updates to Huawei smartphones.
Markets now await Wednesday’s release of minutes from the US central bank’s May 1 meeting, looking for insights on future interest ratess.
Fed Chair Jerome Powell said on Monday that it was premature to ascertain the impact of trade and tariffs on the trajectory of monetary policy, instead pointing to recent healthy economic data.
“From a technical point of view, a first positive signal (for gold) would be a recovery to $1,290, while a fall below the recent low of $1,266 could open space for a further decline,” said ActivTrades analyst Carlo Alberto De Casa.
Among other precious metals, silver was down 0.4pc at $14.40 an ounce, closing in on the more than five-month low of $14.33 touched in the previous session.
Platinum rose 0.3pc to $813.98 and palladium eased by 0.2pc to $1,326.51.

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