August 6, 2018 / 4:46 AM / 3 months ago

PRECIOUS-Gold pares early gains; stronger dollar weighs

    * Spot gold may retest support at $1,206/oz- technicals
    * Specs raise net shorts in gold to record in week ended
July 31 
    * SPDR gold holdings down 0.26 pct on Friday 

 (Recasts, adds detail, and updates prices)
    By Apeksha Nair
    BENGALURU, Aug 6 (Reuters) - Gold prices pared early gains
and steadied amid a firm U.S. dollar on Monday, albeit trading
above a 17-month low supported by concerns over the U.S.-China
trade conflict.
    Spot gold        was steady at $1,213.05 an ounce, as of
0650 GMT, after hitting as high as $1217.85 in early trade.
    U.S. gold futures         were down 0.2 percent at $1,221.4
an ounce. 
    "Gold is still very much being influenced by how the dollar
is moving. The uptick in gold prices is from the market pricing
in how the U.S.-China trade war issues actually play out," OCBC
analyst Barnabas Gan said. 
    Gold prices had rebounded on Friday from a 17-month low of
$1,204 per ounce as dollar slipped after data showed U.S. job
growth slowed in July.
    The dollar had also weakened against the yuan on Friday
after the Chinese central bank sought to stabilize its currency.
                          
    The greenback, however, regained footing on Monday and
strengthened against major peers.          
    China proposed retaliatory tariffs on $60 billion worth of
U.S. goods on Friday, further escalating a bitter trade
conflict, after the Trump administration sought to ratchet up
pressure for trade concessions by proposing a higher 25-percent
tariff on $200 billion worth of Chinese imports.              
    On Monday, Chinese state media lambasted U.S. President
Donald Trump's trade policies in an unusually personal attack,
and sought to reassure investors worried about China's economy
as growth concerns rattled its financial markets.              
    While the intensifying trade spat has been one of the reason
gold prices have been supported above the $1,200 handle, the
trade issues have also been playing off into a more expensive
dollar rather than higher gold prices, Gan said.
    "The more expensive dollar is capping the rally in gold
prices. Further downside for gold still appears to be possible
especially if the dollar continues to rally."
    Spot gold may retest a support at $1,206 per ounce, a break
below which could cause a loss to the next support at $1,194,
Reuters technicals analyst Wang Tao said.              
    Holdings in SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, fell 0.26 percent to 794.90
tonnes on Friday.             
    Hedge funds and money managers added a hefty 13,931
contracts to their net short position in the week to July 31,
bringing it to 41,087 contracts, the biggest since records
became publicly available in 2006, data showed on Friday.
       
    In other precious metals, silver        climbed 0.1 percent
to $15.39 an ounce. Platinum        edged 0.5 percent higher to
$831.10 an ounce, while palladium        rose 0.3 percent to
$911.97 an ounce.   

 (Reporting by Apeksha Nair in Bengaluru; Editing by Amrutha
Gayathri and Sherry Jacob-Phillips)
  
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