LONDON. — Gold steadied yesterday as the dollar trod water against a basket of currencies, with investors reticent to bid up the metal in the face of looming US interest rate increases and escalating Sino-US trade tensions.
Since its April peak gold has dropped more than 12 percent as a trade war between China and the US has driven investors to seek safety in the dollar rather than in gold, a traditional safe haven.
Bearish bets on Comex gold have risen to record levels while investors have liquidated exchange-traded gold fund holdings.
“(There’s) a generally strong dollar backdrop, which is keeping the precious metal under pressure. The market is very short gold futures,” said ICBC Standard Bank analyst Marcus Garvey.
He added, however, that financial positions are becoming so short that it would not take much of a surprise to spark a short-covering rally.
“There’s a good chance gold recovers back to $1,200 and possibly a bit higher,” Garvey said.
Spot gold dipped 0.1 percent to $1 194,55 an ounce at 1144 GMT while US gold futures were flat at $1 199,70.