Gold struggles to stabilise, platinum and palladium follow base metals higher

July 24, 2018

London (July 24)  Gold ticked higher on Tuesday as the dollar slipped, but the metal struggled to stabilise after weeks of losses.

Spot gold was 0.2% firmer at $1,226.31 an ounce at 10.15am GMT, while US gold futures for August delivery rose 0.1% to $1,226.50 an ounce.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.2% after touching a one-year high last week.

Gold has shed more than 10% since touching a peak of $1,365.23 in mid-April, largely hit by a stronger dollar amid US interest rate hikes. Last week it hit a one-year low.

"Gold is likely to see a sideways trend in coming weeks, trying to find a bottom," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt.

"It’s too early to say that gold has bottomed out, but there are some tentative signs pointing in that direction. This process could take weeks if not months to recover from the losses and the damaged technical picture," he said.

On the technical side, gold has broken below the 200-day moving average on a weekly basis. Fritsch said one positive sign was that holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6% to 802.55 tonnes on Monday, its highest in over two weeks.

Gold could experience volatility with sharp, brief moves higher on short-covering since speculative short positions were at near record high levels, Fritsch said.

Gold prices, which usually gain in times of political and financial instability, have failed to do so, analysts have noted, with investors’ reaction to the dispute between the US and Iran staying muted.

Iran on Monday dismissed an angry warning from US President Donald Trump that Tehran risked dire consequences if it made threats against the US.

Trump was responding to comments by Iranian President Hassan Rouhani.

"In addition to the dollar, there has been little follow-through on the Trump and Rouhani war of words and, frankly, the overall reaction on risk sentiment was muted," said Stephen Innes, Asia-Pacific trading head at Oanda.

The other precious metals, which have industrial applications, got a boost from higher base metal prices.

Silver rose 0.8% to $15.48/oz, platinum gained 0.8% to $837.20/oz and palladium added 0.4% to $917.25/oz.


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