Investing.com – Gold prices plunged Monday amid a broad-based selloff in metals on concerns the U.S.-China trade war could take a turn for worse while a stronger dollar also caused selling pressure.
for December delivery on the Comex division of the New York Mercantile Exchange fell by $8.60, or 0.71%, to $1,198.10 per troy ounce.
Gold prices fell below the important $1,200 psychological level, raising fears that further downside awaits the yellow metal as the dollar may have more room for growth ahead of the Federal Reserve’s widely-expected third rate hike later this month.
According to , 100% of traders expect the Federal Reserve to raise rates on Sept. 26.
The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.35% to 95.40.
Dollar-denominated assets such as gold are sensitive to moves in the dollar. A fall in the dollar makes gold cheaper for holders of foreign currency and raises demand.
As well as the prospect of raising interest rates, the dollar is also expected to benefit from ongoing investor bets that the U.S. economy would fare better than that of its rivals in a trade war.
The United States could proceed with plans to implement tariffs on Chinese imported goods later this week. Reports surfaced last week claiming President Donald Trump was considering moving ahead with the tariffs on China after the comment period expires on Thursday.
Public hearings were held during the last two weeks in August and American corporates were allowed to submit written comments on the Trump’s proposal to slump China with harsher trade penalties.
The turn lower for gold prices comes against a backdrop of improving sentiment on the yellow metal. Data last week showed traders reduced their bearish bets on a further decline in gold prices.
CFTC COT data showed money managers in gold futures to 3,100 lots from 8,700 lots for the week ended Aug. 28.
Fears of an escalating U.S.-China trade war, prompted traders to abandon metals as copper prices slumped for a fifth day, while zinc and nickel fell more than 2%.
fell 2.70% to $2.60, while fell 1.82% at 2,412.75.
fell 1.09% to 2,068.00, while lost 2.42% to 12,485.00.
lost 2.73% to $14.16 a troy ounce, while dropped 1.51% to $775.20.
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Source: Investing.com
