Gold hovers near 2-week low on strong dollar
May 22: Gold edged lower on Wednesday to hover near a two-week low, as a stronger dollar and signs of easing Sino-US friction dented demand for bullion ahead of the minutes from US Federal Reserve's latest meeting.
Spot gold edged down 0.1per cent to $1,273.47 per ounce at 0704 GMT. In the previous session, the metal fell to $1,268.97, its lowest since May 3.
US gold futures were unchanged at $1,273.20 an ounce.
The dollar hovered near a 3-1/2-week high supported by higher US yields, which rose overnight after the United States eased trade restrictions on Chinese telecommunications equipment maker Huawei Technologies Co Ltd.
"A stronger dollar and Washington's extension to Huawei for 3 months has put the knife into gold," OANDA analyst Jeffrey Halley said. On Monday, the US Department of Commerce granted Huawei a license to buy US goods until Aug. 19, a move intended to give telecom operators that rely on Huawei enough time to make alternative arrangements.
"The market has been tipping it as an easing of trade friction, so we have seen a rotation out of safe harbour trade, albeit temporarily," Halley added.
Chinese Ambassador to the United States Cui Tiankai on Tuesday said Beijing was ready to resume talks with Washington, but blamed the latter for frequently "changing its mind" on tentative deals.
Gold is now more than 5per cent below its late-February 2019 peak of $1,346.73 per ounce.
Meanwhile, investors await the release of US Federal Reserve's minutes at 1800 GMT, which is expected to provide insights into the May 1 meeting by the central bank, when policymakers kept interest rates steady and signalled little appetite to adjust them any time soon.
On Monday, Fed Chair Jerome Powell reiterated his unmoved demeanour stating it was premature to ascertain the impact of trade and tariffs on monetary policy.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4per cent to 739.69 tonnes on Tuesday.
However, holdings have fallen nearly 7per cent so far this year, indicating a subdued investor interest in bullion. -Reuters