Gold falls below 2-week low on strong dollar, stocks

May 21 (Reuters) – Gold prices dropped on Tuesday to the lowest in more than two weeks, as the dollar strengthened along with equities and other riskier assets ahead of the U.S. Federal Reserve’s release of minutes from its latest meeting.

Spot gold fell 0.3% to $1,273.70 per ounce as of 2:24 p.m. EDT (1824 GMT). The session low of $1,268.97 was its lowest since May 3.

U.S. gold futures settled down 0.3% at $1,273.20.

“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 at TD Securities in Toronto.

“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.

International equities markets strengthened after the United States temporarily relaxed curbs on China’s Huawei Technologies, easing worries about further escalation of the U.S.-China trade war.

The dollar index climbed to its highest in nearly a month, supported by the U.S.-China trade war and higher U.S. Treasury yields.

“Precious metals prices have come under pressure across the complex as trade tensions have heightened, the U.S. dollar has strengthened and U.S. Treasury yields have edged higher,” Standard Chartered analysts said in a note.

“Gold prices have tumbled to test the lows for the month ahead of the FOMC May meeting minutes due on 22 May. Our economists expect the minutes to emphasize patience and data-dependency.”

The Fed minutes are expected to provide insights into the May 1 central bank meeting in which policymakers decided to keep interest rates steady and signaled little appetite to adjust them any time soon.

On Monday, Fed Chair Jerome Powell said it was premature to ascertain the impact of trade and tariffs on monetary policy.

Reuters

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya