Gold price steadies, but fights to trade above $1,200 as trade jitters unsettle markets

September 5, 2018

New York (Sept 5)  Gold futures struggled to trade above $1,200 an ounce early Wednesday as worries about trade negotiations and a placid dollar served as competing forces, holding the precious metal at break-even levels.

December gold GCZ8, +0.01% added 60 cents, or less than 0.1%, to reach $1,199.80 an ounce, after finishing Tuesday’s session down 0.6%, settling beneath the psychological level at $1,200 for the first time since Aug. 23., according to FactSet data.

Worries about tariff disputes, notably between the U.S. and its longstanding Canadian counterparts and clashes between Washington and Beijing, with China tariffs set to kick in this week, have unsettled investors. The outlook for emerging-market economies also have fostered a recent spate of anxiety on Wall Street.

However, that skittishness lately has helped to power the U.S. dollar higher rather than providing lift to traditional havens like gold.

A stronger dollar can make assets primarily priced in the currency less attractive for buyers using other monetary units. A measure of the buck’s strength, the ICE Dollar Index DXY, +0.07% was seeing muted action early Wednesday at 95.39, down less than 0.1%, but the index has gained 0.3% over the week thus far.

On Tuesday, the dollar strengthened further after a manufacturing report from the Institute for Supply Management for August came at a 14-year high of 61.3%h from 58.1% in July, surpassing the forecast for 57.9% from economists surveyed by MarketWatch. A reading of more than 50 indicates expanding activity.

“The yellow metal dropped below the $1,200 price level as U.S. fundamentals firmed after the positive manufacturing data confirms the steady pace of the American economy,” wrote Alfonso Esparza, a senior strategist at online trading platform OANDA in a Wednesday research note.

“Trade war risk remains on the radar as additional U.S. tariffs on China are set to kick in this week and weekend comments from President Trump did not help the U.S.- Canada trade negotiations,” he wrote.

Meanwhile, December silver SIZ8, -0.04% tacked on 3 cents, or 0.1%, to reach $14.195 an ounce, after closing Tuesday with a 2.6% loss.

In exchange-traded metals products, the popular SPDR Gold ETF GLD, +0.06% rose 0.1%, while the iShares Silver Trust SLV, -2.49% advanced 0.2%, in premarket action.


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