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Gold Dips as Fair-Weather Investors Opt for Dollar

Post time: 2019/5/29 19:45:13

Pacific Exchange(PEX)according to Investing news on 29 May 2019 - When it comes to the trade war, gold has found the crowd it attracts to be fair-weather friends.

Bullion and futures of gold slipped on Tuesday as investors showed their preference for the dollar as a hedge to the U.S.-China tariffs showdown, diminishing the yellow metal's standing as the original safe haven.

Spot gold, reflective of trades in bullion, traded at $1,278.36 per ounce by 2:45 PM ET (19:14 GMT), down $6.75, or 0.5%, on the day. Gold futures for June delivery traded on the Comex division of the New York Mercantile Exchange settled down $6.50, or 0.5%, at $1,277.10 per ounce.

U.S. President Donald Trump said over the Memorial Day weekend that the Washington and Beijing were far from a trade deal. China's state media has also been playing up the escalating trade war between world’s two largest economies since Beijing’s top trade negotiator, Vice Premier Liu He, returned from Washington without a deal in mid-May.

And the dollar has been benefitting from all these. The dollar index, which measures the greenback against a basket of six currencies, was up 0.4% at 97.828.

Signals are mixed for spot gold as it failed twice to break resistance at $1,286 per ounce, according to Reuters technical analyst Wang Tao. Hedge funds and money managers sharply reduced their net long positions in Comex gold in the peak to May 21, the U.S. Commodity Futures Trading Commission said on Friday.

Gold's direction in the coming week would be decided by who replaces Theresa May as British prime minister and whether the candidate makes a no-deal Brexit more likely, which would further weaken the pound then and boost the value of gold.

Elsewhere in metals, palladium rose, holding on to its mantle as the world's costliest traded metal. Spot palladium jumped $5.25, or 0.4%, to $1,341.30 an ounce.