Gold Prices Fall to More Than 6-Month Lows Amid Ongoing Dollar Strength

New York (July 2)  Gold prices fell to more than six-month lows as the dollar added to gains, denting demand for the yellow metal despite the increased risk of an escalating trade war as U.S. tariffs on Chinese imported goods are expected to come into effect later this week.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $10.70 or 0.84%, to $1,243.70 a troy ounce. Gold prices remained on track to test last December's lows of $1,236.50.

The dollar resumed its climb higher as traders increased their bets that the U.S. economy would fare better in a trade war than some of its trading peers ahead of U.S. tariffs on $34 billion worth of Chinese imported goods slated for July 6.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.58% to 94.78.

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 thus, increases demand for the precious metal.

The poor start to the week for gold prices comes as traders continued to shun the yellow metal slashing their bullish bets for the second-straight week, according to data from U.S. Commodity Futures Trading Commission (CFTC) released Friday.

CFTC COT data data last week showed speculative net long positions on gold decreased to 76,700 lots from 96,500 lots last week.

In other precious metal trade, silver futures fell 2.09% to $15.86 a troy ounce, while platinum futures lost 5.03% to $814.70 an ounce.

Investing.com