Gold price slips as dollar gains, gives up initial Cohn-exit boost

March 7, 2018

New York (Mar 7)  Gold traded slightly lower Wednesday, giving up an overnight boost that tracked sharply lower stock futures trading after the resignation of key Trump ally Gary Cohn, purportedly over the gully in their views on trade and tariffs.

In early U.S. hours, April gold GCJ8, -0.22% fell $3.40, or 0.3%, to $1,331.80 an ounce. It settled Tuesday at $1,335.20 an ounce—the highest finish since Feb. 16. The contract has been volatile in recent days considering that gold prices had settled at their lowest levels of the year just last Thursday and recorded the first monthly loss, in February, since October.

Part of gold’s about-face may hinge on the dollar’s moves. The ICE U.S. Dollar Index DXY, +0.17%  traded up 0.2%. A stronger dollar makes gold priced in the U.S. unit less attractive to investors using another currency. The currency tumbled to 16-month lows against the safe-haven Japanese USDJPY, -0.34%  late last week when the first of this trade-related market churning underpinned a flight to the perceived safety for assets such as precious metals.

Before gold turned lower, “news of the resignation of Trump’s chief economic adviser Gary Cohn contributed to the price rise overnight,” said Carsten Fritsch, commodities analyst with Commerzbank, in a note. “He resigned over differences in opinion about the planned introduction of U.S. import tariffs on aluminium and steel. This reignited concerns among market participants about a trade war, thereby generating uncertainty” that pushed investors into haven gold.

See: Gold ETFs see outflows in February amid price volatility

Bloomberg News late Tuesday reported that hours before Cohn’s departure, Trump had asked the adviser to publicly endorse a plan to implement tariffs. That adds credence to expectations that the import duties—a 25% tariff on steel and 10% on aluminum—will be levied in coming days.


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