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Gold Prices Fall on Firmer Dollar

CommoditiesJul 11, 2018 01:57AM ET
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© Reuters. Gold prices fell on Wednesday after the dollar firmed

Investing.com – Gold prices fell on Wednesday as the dollar firmed after the Trump administration threatened to impose additional tariffs on $200 billion worth of Chinese goods.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange gained 0.27% to $1,252.00 a troy ounce by 1:45AM ET (05:45 GMT).  

The 10% tariffs will not take effect immediately but will undergo a two-month review process, according to a government statement on Tuesday. The proposed list of goods includes consumer items such as clothing, television components and refrigerators as well as other technology products.

In response, China's commerce ministry said in a statement released around midday on Wednesday that it was "shocked" by the latest U.S. trade action and urged international community to work together against the trade bullying, while calling the actions "completely unacceptable".

"I think the bad news (for gold) in regards to geo-political risk is that the trade issue is already priced in," said Cameron Alexander, an analyst with metals consultancy GFMS.

A firmer dollar was cited as headwind for gold, as it makes bullion more expensive for holders of other currencies as the commodity is priced in dollars.

The U.S. Dollar Index, which tracks the greenback against a basket of currencies, was up 0.12% at 93.97 on Wednesday.

"When trade war risk escalates investors run for cover... I always have gold on as a hedge but its been more challenging to have this view when the U.S. dollar is attracting haven flows," said Stephen Innes, APAC trading head at OANDA.

"For gold, support looks to be holding well around $1,250 but my fear is the USD could break higher and this is the biggest risk I see for gold."

Gold Prices Fall on Firmer Dollar
 

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