May 20, 2019
Gold near 2 week low as dollar eclipses safe haven appeal
(Reuters) - Gold steadied on Monday to trade near a two-week low hit in the previous session as strong U.S. economic data underpinned the dollar, boosting its safe-haven status over gold amid geopolitical and trade tensions.
Spot gold was broadly unchanged at $1,276.55 per ounce as of 0525 GMT.
U.S. gold futures edged 0.1% higher at $1,276.20 an ounce.
The metal fell to a two-week low of $1,274.51 an ounce on Friday after data showed United States consumer sentiment jumped to a 15-year high in early May amid growing confidence over the
"The safe-haven demand of the U.S. dollar is taking some of the gloss off gold's safety," said Michael McCarthy, chief market strategist, CMC Markets.
"It is a tough time all around for gold with the break below $1,290 also pressuring it. In the absence of safe-haven demand I would expect to see ongoing modest pressure on gold prices."
Rekindled Sino-U.S. trade tensions have seen the dollar mimicking its characteristics from last year when it was preferred over gold as a safe-haven hedge.
The dollar index booked its biggest weekly rise since early March last week supported by concerns about European parliamentary elections.
Market participants were left concerned after Google confirmed a Reuters report stating that it suspended some business with Chinese tech giant Huawei, which has been a sticking point in the trade relations between the United States and China.
In the Middle East, Iran was served a new warning by Trump who tweeted that if the country wanted to fight, that would be its "official end".
The heightened rhetoric follows last week's attacks on Saudi oil assets and the firing of a rocket on Sunday into Baghdad's heavily fortified "Green Zone" that exploded near the U.S. embassy.
"For gold, $1,265 is now a critical support that must hold. A daily close below that region implies a much deeper correction could be imminent," OANDA analyst Jeffrey Halley said in a note.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4% to 736.17 tonnes on Friday.
Hedge funds and money managers also raised their net long positions in COMEX gold in the week to May 14, the U.S. Commodity Futures Trading Commission said on Friday.
"We suspect some of the these new longs must have gotten shredded over the past two sessions," INTL FCStone analyst Edward Meir said in a note.
Among other precious metals, silver was up 0.3% to $14.44 an ounce, having registered a more than five-month low at $14.35 in the previous session.
Platinum gained 1.1% to $822.55, having fallen to $812.50, its lowest since March 11, in the previous session.
Palladium rose 0.5% to $1,316.65. The metal used in catalytic converters in car exhaust systems has shed nearly 19% since scaling a record peak of $1,620.53 in March.