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Gold drops beyond 1-week trough on firmer dollar

Gold drops beyond 1-week trough on firmer dollar

Mubasher: Gold prices on Thursday fell beyond one-week low, reached in the prior session, as the US dollar strengthened.

However, the precious metal was still supported, remaining above the key $1,300-level, by concerns over slowing global economic growth and another potential US government shutdown.

By 8:40 am GMT, spot gold declined 0.17% to $1,304.43, having hit its lowest since 29 January at $1,305.30 per ounce in the previous session, while US gold futures dropped 0.52% to $1,307.50.

The US dollar index, which traces the greenback against six major rivals, was close to its highest in two weeks in early Asian trade.

By 8:31 am GMT, the index rose 0.14% to 96.5230.

The strength of dollar means more expensive greenback-denominated gold for holders of other currencies.

The benchmark S&P 500 index dropped as worries mounted over growth, disappointing earnings reports, and the spectre of another US government shutdown in the wake of President Donald Trump’s State of the Union speech.

The Australian central bank was the latest to signal monetary easing in response to economic headwinds.

The US Federal Reserve said it would be patient in raising borrowing costs this year, while the European Central Bank (ECB) sounded less certain that it would start tightening policy later this year.

Moreover, the Bank of England (BOE) looks poised to slash its projections for the UK’ s already slowing growth on Thursday, mirroring an approach in the face of uncertainty over Brexit and a slowdown in many of the world’s large economies.

US Treasury Secretary Steven Mnuchin said on Wednesday that he and other US officials will be heading to Beijing next week for trade negotiations with Chinese officials.

In addition, US Fed Chairman Jerome Powell would testify before the House Financial Services Committee on 27 February, the committee’s chairwoman said on Wednesday.