Gold prices covering some losses from Monday losses, as a leading dollar index traded at its highest levels since December, cutting demand for investors buying precious metals using other currencies.
It appears that, facing growing uncertainty, investors are once more seeking refuge in the US dollar, concerns regarding the Chinese economy, weak growth and political tension in the Eurozone, Brexit and lingering global trade tensions are weighing in on market sentiment and the dollar is once more sought after as a safe heaven asset.
As a result, April gold GCJ9, +0.01% lost $6.60, or 0.5%, to settle at $1,311.90 an ounce. It fell 0.3% last week, but has climbed 2.9% since the end of last year based on the most-active contract as uneasy trade progress, grouped with a series of global growth downgrades, sent investors to seek cover in lower-risk pockets of the financial markets.
The SPDR Gold Shares ETF GLD, -0.49% fell 0.5% in Monday dealings.
The U.S. Dollar Index DXY, -0.04% was up 0.5% at 97.10 trading at its highest since mid-December as gold futures settled Monday. It posted a rise of 1.1% last week.
U.S. indexes struggled for direction Monday, after posting modest gains last week.
Investors were also looking ahead to trade talks today with a delegation of U.S. officials in China for the next round. U.S. President Donald Trump said last week that he had no plans to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal. Trump has vowed to increase U.S. tariffs on $200 billion worth of Chinese imports to 25% from 10% if the two sides cannot reach a deal. That action is seen aggravating economic growth at a time when a late-cycle recovery is already showing signs of sputtering.
With stocks now showing signs of rolling over in response to trade talks concerns and a weaker growth forecast, gold should find enough support once again to prevent a serious challenge at support, currently at $1,300 an ounce, followed by $1,275,”