Gold prices tumbled on Monday, as the dollar retained its bullishness amid ongoing trade tensions between the United States and China. At this stage, a comprehensive trade deal between the two superpowers appears highly unlikely before the March 1 deadline.
Gold Loses Its Shine
The April futures contract for gold reached a session low of $1,307.10 a troy ounce, the lowest since Jan. 25. The contract was last down $8.30, or 0.6%, at $1,310.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Bullion is down 1.2% from its nine-month peak last set on Jan. 31.
Silver futures, which often trade in the same direction as gold, bottomed at $15.66 a troy ounce on Monday. The grey metal is teetering on three-week lows, having declined 10 cents, or 0.7%, to $15.71 a troy ounce.
The gold/silver ratio that is used to determine when to buy and sell precious metals has fallen to 83.20 from a peak near 87.00 in December. This basically states that 83.20 ounces of silver are needed to buy one ounce of gold at current prices.
Dollar Rebuffs Dovish Fed
The U.S. dollar continued to surge on Monday, as traders shrugged off the Federal Reserve’s dovish turn amid ongoing trade tensions with China. The dollar index (DXY), a broad-based measure of the greenback’s performance, climbed 0.3% to 96.93. That was the highest level in over a month. Since bottoming at 95.34 on Jan. 31, DXY ha gained 1.7%.
A stronger dollar tends to undercut greenback-denominated assets such as gold and silver, making them more expensive for holders of other currencies.
The greenback is expected to strengthen in the near term as traders look for safety nets amid global economic uncertainty.