· Gold prices dropped, remaining near a six-month low on Wednesday as the U.S. dollar hovered around 11 month peaks but was offset by festering global trade tensions, while platinum hit a 2-1/2-year trough. Rising U.S. interest rates also pressured bullion.
· Spot gold lost 0.2 percent at $1,272.44 by 1:36 p.m. EDT (1736 GMT). U.S. gold futures for August delivery settled down $4.10, or 0.3 percent, at $1,274.50 per ounce.
· Trade tensions between the United States and China are showing no signs of easing. On Tuesday, a White House trade adviser said Beijing had underestimated the U.S. president's resolve to impose more tariffs.
That followed Washington threatening to impose tariffs on $200 billion of Chinese goods and Beijing saying it was raising tariffs on $50 billion of U.S. goods.
· Gold, seen as a safe haven asset, usually gains from geopolitical or economic tensions, but has struggled this time around because the dollar has risen strongly, making dollar-priced gold costlier for non-U.S. investors.
· "This environment we've had with interest higher rates and a higher U.S. dollar has kind of halted the rise of gold at least for the short term," said Will Rhind, CEO of GraniteShares.
· However, "the reason it hasn't fallen as much as you'd expect is that safe-haven demand has sustained the price," said Capital Economics analyst Simona Gambarini.
· The U.S. dollar was little changed, hovering near an 11-month peak against a basket of major currencies as China's signal of a tolerance of a stronger yuan offset anxiety about the global trade conflict.
· World markets recovered from a recent selloff on the trade tensions, while Treasury yields rose after the Federal Reserve chairman said the U.S. central bank should continue with a gradual pace of interest rate increases.
· Fed Chairman Jerome Powell said the pace should stay the same given that the labor market does not seem to be overly tight.
· Platinum increased 0.7 percent at $873.20 an ounce. Earlier in the session, it touched $854.50, its lowest since Feb. 3, 2016.
Silver gained 0.3 percent at $16.31 an ounce.
Palladium lost 0.1 percent at $965.60 per ounce, having hit a one-month low of $960.25.
Reference: Reuters
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