Gold slips as dollar bounces, focus on U.S.-China row

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August 11, 2020

Gold fell on Tuesday as the dollar firmed after Beijing slapped sanctions on U.S. officials in the latest flare-up in tensions between Washington and Beijing, with investors also keeping a close watch on negotiations over a U.S. stimulus plan.

Spot gold was down 0.5% to $2,017.98 per ounce by 0234 GMT, moving further away from a record high of $2,072.50 hit last week. U.S. gold futures fell 0.6% to $2,028.10.

Apart from pressure from a stronger dollar, “gold prices are undergoing a period of consolidation after rising more than 14% in three weeks,” said DailyFx strategist Margaret Yang.

The dollar, an alternative safe-haven asset especially during flare-ups in tensions between the world’s two biggest economies, rose to a one-week high against its rivals.

Asian stocks were off to a cautious start as relations between Washington and Beijing worsened over Hong Kong.

China on Monday imposed sanctions on 11 U.S. citizens, including lawmakers from President Donald Trump’s Republican Party, after Washington’s sanctions on Hong Kong and Chinese officials last week.

Meanwhile, U.S. congressional leaders and Trump administration officials said they were ready to resume negotiations on a coronavirus aid deal, although it was unclear whether Democrats and Republicans would be able to bridge their differences.

Chicago Federal Reserve Bank President Charles Evans said policymakers need to coordinate to come up on creative policies to help people affected most by the pandemic, which has infected more than 5 million Americans.

Gold remains underpinned, analysts said, with prices up more than 33% so far this year mainly due to unprecedented stimulus rolled out by governments and central banks, as it’s widely viewed as a hedge against inflation and currency debasement.

“Gold trade attracted a lot of fast money last week, and I believe a washout of speculative long positioning sets gold up for a more balanced rally going forward,” said Jeffrey Halley, a senior market analyst at OANDA.

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Silver dropped 0.6% to $28.97 per ounce and platinum fell 0.7% to $979.50, while palladium rose 0.5% to $2,231.31.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Gold slips as dollar bounces, focus on U.S.-China row

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