Gold prices fall as dollar gains vs yuan in escalating trade tensions between the world’s two largest economies
Gold prices fell on Wednesday as the dollar firmed against the yuan after the United States threatened to impose additional tariffs on Chinese goods, escalating trade tensions between the world’s two largest economies.
The Trump administration said on Tuesday it would slap 10 percent tariffs on an extra $200 billion worth of goods imported from China.
The news comes after Washington imposed 25 percent tariffs on $34 billion of Chinese imports last week. Beijing responded immediately with matching tariffs on the same value of US goods exported to China.
Spot gold fell 0.3 percent at $1,250.90 an ounce at 0315 GMT. In the previous session, bullion hit a one-week low at $1,246.81 an ounce.
US gold futures for August delivery were 0.3 percent lower at $1,251.90 an ounce.
The offshore Chinese yuan fell as low as 6.6918 per dollar, down more than 0.5 percent from late US levels and edging near its 11-month low of 6.7344 touched on July 3.
A firmer greenback makes bullion expensive for holders of other currencies as the commodity is priced in dollars.
“When trade war risk escalates investors run for cover… I always have gold on as a hedge but its been more challenging to have this view when the US dollar is attracting haven flows,” said Stephen Innes, APAC trading head at OANDA.
“For gold, support looks to be holding well around $1,250 but my fear is the USD could break higher and this is the biggest risk I see for gold.”
Spot gold may break a support at $1,247 per ounce and fall more towards the next support at $1,237 as it has completed a bounce from the July 3 low of $1,237.32, Reuters technical analyst Wang Tao said.
Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, fell 0.22 percent to 799.02 tonnes on Tuesday.
Among other precious metals, silver fell 0.6 percent at $15.95 an ounce and palladium was 0.1 percent lower at $940.40.
Platinum shed 0.7 percent at $836.70 per ounce.
The platinum market is expected to see its fourth consecutive surplus in 2018, led by a fall in demand in the automotive sector, yet supply is expected to drop and possibly support prices, CPM Group said on Tuesday.
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