Gold price nears lowest level in week as dollar gains
Singapore (Feb 7) Gold was trading close to a more than one-week low on Thursday, weighed down by a stronger dollar, but uncertainties around the Sino-US trade spat and concerns about slowing global growth supported the metal above the key $1,300 level.
Spot gold was steady at $1,306.08 per ounce by 10.22am GMT, after touching its lowest since January 29 at $1,302.11. Prices fell 0.7% in the previous session in their biggest one-day drop since January 18.
US gold futures were down 0.3% at $1,310.60.
"Despite concerns of a slowing global economic growth, it seems the dollar is providing some headwinds for gold at this stage," said Ross Norman, CEO at Sharps Pixley.
"Effectively this type of correction is not a bad thing but broadly speaking, the bull run is very much in place."
The extent of the current slowdown in the global economy was illustrated as India unexpectedly cut its interest rates and data showed Germany's economy slowed in December, underscoring fears about a broader slump in Europe.
Gold rose to its highest level since late April last week after the US Federal Reserve kept interest rates steady, but has lost ground ever since as the dollar gained.
The dollar index, which tracks the greenback against major currencies, was on course for a sixth straight session of gains and trading close to its two-week high, making bullion more expensive for holders of other currencies.
"Uncertainty over U.S.–China trade relations and the potential for another US government shutdown continue to underpin interest toward $1,300 and should see supportive price action remain over the near term," MKS PAMP Group said in a note.
In his state of the union address, US President Donald Trump repeated his promise to build a border wall with Mexico raising the prospect of another US government shutdown.
While Trump did not offer much clarity on the trade row, U.S. Treasury Secretary Steven Mnuchin said on Wednesday that he and other US officials will travel to Beijing next week aiming to clinch a deal.
"It would be interesting to see whether a test of the support level of $1,300 would attract the bulls and confirm the positive momentum of the last few months," ActivTrades chief analyst Carlo Alberto De Casa wrote in a note.
Reflecting investor sentiment in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a fourth straight session on Wednesday.
Among other precious metals, palladium gained about 0.4% to $1,38.50 per ounce.
Silver was up 0.1% at $15.68, and platinum lost about 0.2% to $801.11 per ounce, after touching its lowest level since January 25.
Reuters
