Futures & Commodities | Gold | Gold Price Report: Gold dips 1% as investors opt for dollar amid Trump probe

3 minutes - Source: CNBC

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One kilogram gold bars are displayed for a photograph at the YLG Bullion International headquarters in Thailand on January 13, 2016.
Dario Pignatelli | Bloomberg | Getty Images

Gold slid 1% on Wednesday, retreating from a multi-week peak, as political uncertainties in the United States stemming from an impeachment inquiry into President Donald Trump drove investors to the safety of the dollar, limiting bullion’s appeal.
Spot gold fell 1.2% to $1,513.75 per ounce. On Tuesday, prices hit their highest since Sept. 5 at $1,535.60. U.S. gold futures were down 1.3% at $1,520.70.
The dollar index hit a two-week high on safe haven interest amongst investors looking to hedge against risks emanating from the inquiry into Trump accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election, in turn limiting the appeal of the traditional haven, gold.
“It (gold’s pullback) started out with the strength in the dollar weakening the metals and crude; the dollar seems to be a haven,” said George Gero, managing director at RBC Wealth Management.
Gold, however, will continue to be supported “because besides the impeachment worries, everywhere the investor looks, he sees nothing but new worries which support gold prices like continuation of Middle East problems, tariff talks with China etc.”
Adding to an increasingly fragile backdrop on the global geopolitical front, U.S. Secretary of State Mike Pompeo on Wednesday announced the United States is imposing sanctions on certain Chinese entities for knowingly transferring oil from Iran.
“The major underlying factor holding gold near highs is the debt that is out there with all these countries and negative interest rates ... so when you have that, you need to own gold, what else are you going to use to hedge inflation,” said Michael Matousek, head trader at U.S. Global Investors.
“You can use bitcoin, but gold is un-hackable; bitcoin can be hacked, gold is the un-hackable bitcoin.”
Also on the radar was the long drawn U.S.-China trade dispute, Trump delivering a stinging rebuke to China’s trade practices in a speech on Tuesday, saying he would not accept a “bad deal” in the negotiations.
However, U.S. stock indexes hit session highs after Trump said a trade deal with China could happen sooner than expected.