Investing.com – Gold prices hovered above six-month lows Wednesday as traders continued to shun the yellow-metal despite signs of a late-day turnaround in risk sentiment as a strong dollar continued to keep a lid on the yellow metal’s advance.
for August delivery on the Comex division of the New York Mercantile Exchange fell by $4.00 or 0.33%, to $1,255.90 a troy ounce.
Gold prices traded in a narrow range, struggling to move off session lows, as the dollar remained supported despite a slight reversal in intraday risk sentiment helping safe-haven currencies pare some of their losses against the greenback.
The dollar’s move higher was also supported by an announcement from the White House softening its stance on restricting foreign investment.
U.S. President Donald Trump said he would back Congress’ passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), which would expand the powers of the Committee on Foreign Investment in the United States (CFIUS), helping it combat alleged theft of U.S. intellectual property by China.
The decision to back CFIUS and not the somewhat harsher International Emergency Economic Powers Act of 1977 – which would have allowed Trump to impose unilaterally impose restrictions – sparked risk appetite, sending safe-haven currencies like the yen and Swiss franc sharply lower against the greenback.
There may yet be some reprieve for gold, however, as some market participants appeared to turn bearish on the dollar, claiming an end to trade tensions was far from over.
UBS said it would trim its “overall direct exposure to the U.S. dollar,” as a resolution to the ongoing trade tensions could be further away than first thought.
Gold is sensitive to moves higher in the U.S. dollar – a stronger dollar makes gold more expensive for holders of foreign currency, thus, reduces investor demand for the precious metal.
Speculative positioning, however, points to more pressure for the yellow metal as showed money managers slashed their net long positions in gold futures, and piled into new short positions in the week ended June 22.
In other precious metal trade, fell 0.68% to $16.14 a troy ounce, while dropped 1.42% to $862.30 an ounce.
fell 1.42% to $3.002.
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Source: Investing.com
