Gold prices edged down on Tuesday as the dollar hit a more-than-one-week high on the back of intensifying global trade tensions and economic worries in emerging markets.
The yellow metal is 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 0.3 percent at $1,196.90 an ounce at 0639 GMT, while U.S. gold futures had dropped 0.4 percent at $1,202.10 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.
Currencies including the Argentine peso, Turkish lira, South African rand, Brazilian real, Indonesian rupiah and Indian rupee have suffered in recent weeks.
The dollar index, which measures the greenback against a basket of currencies, hit its highest since Aug. 24 at 95.410.
“Gold should track the dollar’s movement very closely and interest rate expectations too are weighing on the metal,” Fung added.
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.
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 this week 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 the edge.
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.
“Gold and silver should bottom out at the current level as they should attract physical buying amid ongoing festival season in India. Dull economic activities may result in some safe haven buying in China,” said Vandana Bharti, assistant vice president of commodity research at SMC Comtrade Ltd.
“Gold should trade (for near term) in a range of $1,190-$1,220, above that we may see prices rising further to $1,237.”
Spot silver was down 0.4 percent to $14.40 on Tuesday, after falling to an over-two-week low at $14.35.
Platinum was up 0.3 percent at $785.70, while palladium was down 0.5 percent at $973.90, after hitting an 11-week high of $985.50 on Monday.
