By Barani Krishnan
Investing.com - The face-off between dollar and gold bulls went the greenback’s way on Tuesday after the World Trade Organization unwittingly tipped the scales by delivering its verdict on the U.S. tariffs on China, just as the yellow metal was recovering some of its lost mojo.
Gold was trading near a two-week high and the dollar at a two-week low when the WTO deemed that the Trump administration’s tariffs on $200 billion worth of Chinese goods were illegal.
The dollar, which has somehow become a default play for U.S.-China troubles despite gold’s wider appeal as a safe haven, immediately shot up on the news, dealing another blow to the longs in the yellow metal.
As a result, U.S. gold for December delivery settled the day up just $2.50, or 0.1%, at $1,966.20 per ounce on New York’s Comex, despite a session high at $1,981.75 — a peak since Sept. 1, when it reached $2,001.
The spot price of gold, which reflects real-time trades in bullion, was down 65 cents, or 0.03%, at $1,956.04 by 2:52 PM ET (18:52 GMT).
Gold bulls have been trying to revive momentum in the yellow metal since the market’s came off August’s record highs of nearly $2,090 on Comex and $2,073 on bullion. This week is pivotal for gold longs, with the Federal Reserve holding its September policy meeting and Chairman Jay Powell likely to deliver a dovish message for the dollar in his news conference Wednesday.
“Gold wasn’t going to break above the $2000 level before the Fed so investors used the WTO headlines as an excuse to head for the sidelines,” said Ed Moya, an analyst at the online trading platform OANDA.
“Gold trading will likely remain choppy until after the Fed policy decision, which should justify rates will remain near zero for the foreseeable future. The Fed is not likely ready to enhance forward guidance, but if they do that could spell trouble for the dollar and send gold soaring. If the Fed tweaks their asset purchase program, that could be all that is needed to send gold higher.”