Gold futures drop to lowest of year as United States dollar rallies

  • Gold futures drop to lowest of year as United States dollar rallies

Gold futures drop to lowest of year as United States dollar rallies

Palladium was 0.1 percent lower at $994.70, after hitting a two-and-a-half-week high at $1,008.50 on Friday.

Gold crashed below its technically important 200-day moving average and the psychologically significant $1,300 mark to $1,288.31, the weakest since December 28.

Spot gold was almost unchanged at $1,311.51 per ounce at 0619 GMT.

USA gold futures for June delivery were slightly changed at $1,320.50, though the weakness in dollar appears to be helping gold prices in Asia, a Hong Kong-based trader said. "Investors are watching the USA bonds and the dollar closely and taking cue from there for the direction of gold price", said Joshua Rotbart, managing partner, J. Rotbart & Co in Hong Kong. "The slight pick up suggests that there might have been some opportunistic buying on the part of investors", said John Sharma, an economist with National Australia Bank.

Higher U.S. interest rates tend to boost the dollar and bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting the appeal of non-yielding assets such as bullion.

The strong USA retail data also suggested that the Federal Reserve will be confident about raising US interest rates.

"Rising U.S. bond yields and a stronger dollar were factors behind gold's decline below the $1,300 level". That is below the $1,310-$1,360 range gold has inhabited since January. "Now you are below $1,300 and the 200-day moving average; people who hold long positions are a little bit nervous", she said.

US 10-year bond yield hits 7-year high

The euro zone needs a new, common "fiscal instrument" to hold its member countries together even when they come under attack in financial markets, European Central Bank President Mario Draghi had said on Friday.

Meanwhile, Asian shares were under pressure after North Korea cancelled high-level talks with Seoul, denouncing military exercises between South Korea and the United States and throwing into question next month's unprecedented summit between Kim Jong Un and U.S. President Donald Trump.

"There are lot of geopolitical risks, but people are just used to it. Therefore it has not become a big driver for gold", said Helen Lau, analyst at Argonaut Securities.

Spot gold may retest a support at $1,302 per ounce, Reuters technical analyst Wang Tao said.

As for other precious metals, silver for July delivery went down 37.6 cents, or 2.26 percent, to settle at 16.269 dollars per ounce.

Platinum rose 0.3 percent to $924.50, having hit its peak since April 25 at $929.10 on Friday.