Gold fades as dollar regains safe-haven appeal, U.S. Treasuries rise
* Trump imposes 10 pct tariffs on $200 bln goods from China
* Expectations of higher U.S. interest rates pressure gold
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl
(Recasts; updates prices, headline; adds comment, second byline
NEW YORK to dateline)
By Renita D. Young and Zandi Shabalala
NEW YORK/LONDON, Sept 18 (Reuters) - Gold prices turned
negative on Tuesday as the dollar strengthened following news
that China would retaliate against a new round of U.S. tariffs
on its goods. U.S. Treasuries also rose, helping boost the
dollar but pressuring gold.
China said that it had no choice but to retaliate against
new U.S. trade tariffs, raising the risk that U.S. President
Donald Trump could soon impose duties on virtually all Chinese
goods that America buys.
The U.S. dollar index strengthened against a basket of major
currencies. A stronger dollar generally weighs on the price of
dollar-denominated gold, which has been losing out on safe-haven
flows to the greenback during the months-long U.S.-China trade
conflict. The dollar was negative earlier.
Spot gold dropped 0.23 percent at $1,197.75 per ounce
by 1:33 p.m. EDT (1733 GMT) in choppy trade. U.S. gold futures
for December delivery fell $3.30, or 0.3 percent, at
Gold prices have declined more than 12 percent since April,
hurt by the intensifying trade dispute between the United States
and China and as rising U.S. interest rates diminished demand
for non-interest-bearing bullion.
"I think there’s a secondary factor where higher rates and
real rates are helping lift the dollar and that's putting
pressure on gold," said Rob Haworth, senior investment
strategist for U.S. Bank Wealth Management.
Higher yields tend to lift the dollar and pressure gold,
which costs to store and insure but does not pay interest.
Investors are eyeing a meeting by the U.S. Federal Reserve
next week at which interest rates are widely expected to be
raised, said ActivTrades chief analyst Carlo Alberto De Casa.
"Any comments about the 2019 monetary policy could be a new
significant driver for the precious metal," he said.
Gold prices were "hovering below massive resistance between
$1,205-$1,215 range", said FOREX.com analyst Fawad Razaqzada,
pointing out that gold was still in a bearish trend.
Investors trimmed their net short positions in Comex gold
and silver in the week to Sept. 11, U.S. data showed on Friday.
"One of the big problems that gold is facing is that it is
trying to battle a mountain of pessimism," ETF Securities
analyst Nitesh Shah said.
"The speculative positioning in gold is down to its lowest
levels since 2001 ... gold is not behaving like the haven that
it is supposed to be."
Spot silver lost 0.1 percent at $14.14 an ounce.
Platinum rose 1.9 percent at $811.30, while palladium
gained 2.7 percent at $1,010.72, reaching its highest
since mid-June at $1,012.50 an ounce.
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Jan Harvey and Cynthia Osterman)
First Published: 2018-09-18 02:57:16
Updated 2018-09-18 19:58:13
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