September 04, 2018
PRECIOUS-Gold prices slip as trade, emerging market worries lift dollar
(Reuters) - Gold prices inched down on Tuesday as the dollar hit a one-week high on the back of intensifying global trade tensions and economic worries in emerging markets.
Gold prices are down about 8 percent this year amid rising U.S. interest rates, trade disputes and the Turkish currency crisis, with investors parking their money in the dollar which is being viewed as a safe-haven asset.
Spot gold was down 0.1 percent at $1,199.20 an ounce at 0347 GMT, while U.S. gold futures had dropped 0.1 percent to $1,205 an ounce.
"The emerging market economic crisis is making currencies very weak and benefiting the dollar, which continues to pressure gold," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent at 95.182.
A firmer U.S. dollar makes gold more expensive for holders of other currencies, with safe-haven demand for gold this year overshadowed by the metal's relationship with the greenback.
"Gold should track the dollar's movement very closely and interest rate expectations too are weighing on the metal," Fung said.
Markets are closely watching U.S. economic data, including a manufacturing survey on Tuesday and an employment report on Friday, which could influence gold's moves as investors look for clues on the pace of U.S. interest rate increases.
Meanwhile, worries over an escalation in trade conflicts between the United States and other countries have kept participants in broader markets on edge.
"With all the noise building around the trade dispute, along with unsettling economic prospects for Turkey and Argentina that will likely drag on more emerging market economies ... gold should be in demand," said Stephen Innes, Asia-Pacific trading
head at OANDA.
After a 16-percent slide in the peso last week, Argentine President Mauricio Macri on Monday announced new taxes and steep cuts to spending in an "emergency" bid to balance next year's budget.
Meanwhile, Turkey's central bank signalled on Monday it would take steps to combat "significant risks" to price stability, comments seen as hinting at interest rate hikes.
Spot gold may fall to $1,190 per ounce, as suggested by its wave pattern and a projection analysis, according to Reuters technical analyst Wang Tao.
Spot silver dropped 0.2 percent to $14.43 on Tuesday, after falling to an over two-week low at $14.37 on Monday.
Platinum was up 0.4 percent at $786.70, while palladium was down 0.1 percent at $977.50, after hitting an 11-week high of $985.50 on Monday.