Gold hits over six-month low as dollar strengthens

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BENGALURU – Gold prices hit their lowest in more than six months on Thursday as the greenback held near one-year highs amid mounting U.S.-China trade friction.
Spot gold was down 0.2 percent at $1,249.71 an ounce, as of 0752 GMT. Earlier in the session, the bullion touched $1,248.25, its lowest since mid-December.

U.S. gold futures for August delivery dropped 0.4 percent at $1,251.20 an ounce.

Gold has been on the downside mainly because of the strengthening dollar and an increase in U.S. interest rates, said Hareesh V, head of commodity research, Geojit Financial Services.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.1 percent to 95.342, after hitting the highest since July last year at 95.531, amid global trade tensions and demand from the looming end of 2018’s first half. [USD/]

Gold prices, which usually rise in times of political and economic uncertainty, have hardly benefited from ongoing global trade tensions, while expectations that the U.S. Federal Reserve will hike interest rates pulled down the bullion.

“Nowadays, there is no safe-haven appeal for gold, people are tracking other assets as safe-haven,” Hareesh said.

U.S. President Donald Trump on Wednesday said he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.

“The dollar may continue to strengthen because of rising U.S. interest rates and yields. That is all the key reason that makes holding gold unattractive,” said Helen Lau, analyst, Argonaut Securities.

Boston Federal Reserve President Eric Rosengren on Wednesday said the central bank should continue to gradually raise interest rates to lower the risk of a major policy error.

The U.S. economy is growing at a 4.5 percent annualized rate in the second quarter following the latest data on home sales and advance trade balance released this week, the Atlanta Fed’s GDPNow forecast model showed.

The Fed has raised rates twice this year and expects another two hikes by the end of this year.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.36 percent to 821.69 tonnes on Wednesday. [GOL/ETF]

In other precious metals, spot silver was 0.2 percent higher at $16.08 an ounce. In the prior session, it touched its lowest since mid-December at $15.94.

Palladium gained 0.2 percent to $949.25 an ounce.

Platinum plunged about 1 percent to $847.95 per ounce. Early in the trade, the metal dropped to $845.50, marking its lowest since late January 2016.

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