July 11, 2018 / 10:48 AM / 10 days ago

PRECIOUS-Gold falls as threat of more tariffs on China boosts dollar

    * U.S. set to slap 10 pct tariffs on $200 bln of Chinese
goods
    * SPDR gold holdings fell 0.22 percent on Tuesday
    * Palladium falls to two-week low

 (Updates prices; adds comment, second byline, NEW YORK to
dateline)
    By Renita D. Young and Maytaal Angel
    NEW YORK/LONDON, July 11 (Reuters) - Gold prices slipped on
Wednesday as U.S. threat of tariffs on an additional $200
billion of Chinese goods pushed safe-haven flows to the U.S.
dollar and dashed hopes that Washington would eventually step
back from the escalating row.
    U.S. President Donald Trump detailed overnight a list of
Chinese products that could face 10 percent tariffs. The clock
now starts ticking on a two-month period of public comment
before the levies are imposed.             
    The news sent the U.S. dollar to an 11-month high versus the
yuan and hit the Australian dollar, but left the euro largely
unmoved. A strong greenback makes U.S. dollar-priced gold
costlier for non-American investors.       
    "Gold is feeling the pressure from commodities across the
board and the firmer dollar," said David Meger, director of
metals trading at High Ridge Futures in Chicago."
    Spot gold        gained 0.9 percent at $1,243.57 per ounce
by 1:34 p.m. EDT (1734 GMT), earlier sinking to an eight-day low
of $1,242.55.
    U.S. gold futures         for August delivery settled down
$11, or 0.9 percent, at $1,244.40 per ounce. 
    "Gold options keep getting higher and higher, which means
people are positioned for prices to rise. It tells us there is
overhanging positive sentiment to gold but right now the money
is sitting on the sidelines," ING analyst Oliver Nugent said.
    The news of more possible U.S. tariffs on China is the
latest in a tit-for-tat spat between the world's two largest
economies.             
    Spot gold may break support at $1,247 per ounce and fall
more towards the next support at $1,237 as it has completed a
bounce from the July 3 low of $1,237.32, Reuters technicals
analyst Wang Tao said.         
    "When trade-war risk escalates, investors run for cover ...
I always have gold as a hedge but it's been more challenging to
have this view when the U.S. dollar is attracting haven flows,"
said Stephen Innes, APAC trading head at OANDA.
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares      , fell 0.22 percent to 799.02 tonnes
on Tuesday.          
    In wider markets, global stock markets fell while metals
slumped to their lowest in a year on fears of a trade war.
Falling equities, seen as risky assets, usually help gold, a
traditional safe haven.            
    Silver        shed 1.4 percent at $15.82 an ounce, while
platinum        dropped 1.4 percent at $830.60. Earlier in the
session, both metals fell to their lowest since July 3.
    Palladium        lost 0.2 percent at $939.50 per ounce,
after falling to a two-week low at $931.40.

 (Additional reporting by Karen Rodrigues; Editing by Bernadette
Baum)
  
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