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Last Updated : Feb 07, 2019 10:57 AM IST | Source: Reuters

Gold falls to 1 week low on stronger dollar, but holds above $1,300 level

US gold futures were down 0.5% at $1,307.30.

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Representative Image

Gold fell to a more than one-week low on February 7, pressured by a stronger dollar, but worries over slowing global economic growth and the spectre of another US government shutdown kept the safe-haven metal above the key $1,300 level.

Spot gold fell 0.2 percent to $1,303.64 per ounce by 0341 GMT, after touching its lowest since Jan. 29 at $1,302.84. Prices fell 0.7 percent in the previous session in their biggest one-day drop since Jan. 18.

US gold futures were down 0.5 percent at $1,307.30.

A possible rate cut by the Australian central bank stokes global slowdown concerns and the US dollar has gained on safe-haven interest, pulling down gold, said Ilya Spivak, a senior currency strategist with DailyFx.

Australia's central bank on Wednesday opened the door to a possible rate cut as it acknowledged growing economic risks in a remarkable shift from its long-standing tightening bias that sent the local dollar sliding.

The dollar index, a gauge of its value versus six major peers, was hovering close to its two-week high.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

Last week, the US Federal Reserve said it would be patient on further rate hikes, while the European Central Bank sounded less certain that it would start tightening policy later this year.

The Bank of England looks set to trim its forecasts for Britain's already sluggish growth on February 7, reflecting the approach of a still uncertain Brexit in just 50 days' time and a slowdown in many of the world's big economies.

"Bullion appeal though demonstrating for pricing weakness in the current term, will hold an integral role in 2019 amidst heightened geopolitical and economic uncertainties," analysts at Phillip Futures wrote in a note.

Wall Street's benchmark S&P 500 slipped amid concerns over growth, disappointing earnings reports and another possible US government shutdown in the wake of President Donald Trump's State of the Union address.

"If there is another shutdown that would stoke concerns about growth which might fuel demand for haven assets like bonds, and gold might gain due to falling treasury yields," Spivak of DailyFx said.

"But, if the dollar finds haven demand, then gold's ability to move higher is going to be limited."

Reflecting lacklustre sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a fourth straight session on Wednesday.

Liquidity in gold markets is expected to remain light in Asian hours with China closed for the Lunar New Year holiday this week.

In other metals, palladium rose 0.4 percent to $1,377.50 per ounce.

Silver was steady at $15.66, and platinum slipped 0.2 percent to $801.50.
First Published on Feb 7, 2019 10:47 am
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