Gold Prices Tumble in more than Two-week Low

Gold Prices Tumble in more than Two-week Low

Gold prices dropped to the lowest in more than two-week low, as investors chose for the dollar and enhanced appetite for riskier assets dented the appeal of bullion, while markets waited for the release of minutes from the U.S. Federal Reserve.

Spot gold fell 0.4 percent to $1,272.55 per ounce, having touched its lowest since May 3 at $1,268.97 in the previous session.

U.S. gold futures settled down $4.10 at $1,273.20.

“One big reason is that the U.S. dollar remains pretty strong. What we are seeing, in a strange way, money is flowing towards the dollar as a safe-haven,” said Bart Melek, head of commodity strategies.

“Also, we have little bit of risk appetite on the stock futures, so less of a reason to go into gold as a hedge,” he added.

The dollar index ascended to its highest in close to month, supported by higher U.S. yields and as worries of the financial effect from the U.S.-China trade spat prompted investors to choose the safety of the U.S. unit over bullion.

However, investors prefer the dollar as they did a year ago in the U.S.-China trade row. Gold is generally used as a safe store of value in times of uncertainty.

Temporarily, equity markets around the world expanded momentum after the United States briefly eased restrictions on China’s Huawei Technologies, easing worries over a further rise in the U.S.-China trade spat.

The Fed minutes are anticipated to offer insights into the May 1 central bank meeting in which legislators decided to keep interest rates stable and signaled little appetite to adjust them any time soon.

“Not much is expected to happen on the policy side. I think they might talk about potential downside risks from trade tensions but does not expect any significant and credible statements pointing to a rate cut this year,” Melek said.

Fed Chair Jerome Powell said on Monday that it was premature to ascertain the effect of trade and tariffs on monetary policy, instead pointing current financial data pointed to a strong supply side.

“From a technical point of view, a first positive signal (for gold) would be a recovery to $1,290, while a fall below the recent low of $1,266 could open space for a further decline,” analysts said.

Among other precious metals, silver dropped 0.2 percent to $14.44 an ounce.

Platinum soared 0.3 percent to $813.90 per ounce, while palladium was mostly unchanged at $1,328.70.