Gold Prices Move Off Lows as Dollar Rally Stalls

Investing.com – Gold prices eased from fresh lows for the year as the dollar turned negative on weaker U.S. economic data.

for August delivery on the Comex division of the New York Mercantile Exchange fell by $3.10 or 0.24%, to $1,271.10 a troy ounce after spiralling to a fresh 2018 low of $1,263.20.

A sharp retreat in the dollar – from its highest level since last summer – supported a recovery in gold but sentiment remained negative amid expectations a more aggressive Fed rate-hike cycle would continue to spur demand for the greenback.

Following the Fed’s rate hike last week, and more hawkish outlook on rate hikes, gold prices have slipped 3%, as traders bet that the divergence between the Fed’s hawkish outlook on monetary policy relative to other central banks will drive demand for the greenback.

“The divergence between U.S. and rest of the world monetary policy will support longer and greater USD strength than we had anticipated,” Barclays (LON:) said in a note to clients.

Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.

Gold was on course to post a second weekly loss in a row as its vulnerability to dollar strength continued to offset safe-haven demand in the wake of renewed U.S.-China trade tensions.

In other precious metal trade, rose 0.04% to $16.315 a troy ounce, while fell 1.22% to $863.40 an ounce.

lost 0.51% to $3.03 to remain at nearly two-month lows amid fears escalating U.S.-China tensions could pressure copper demand from China.

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