Oil falls 1.5% amid concerns about demand and the trade war

Gold prices lost over 1.5% in European trade on Monday, extending the losses for the second straight session and about to hit two-week lows under pressure from the stronger dollar.

Safe haven demand on the precious  metal also slowed  down as US-China trade tensions  receded, while risk appetite improved around the world.

The Price

Gold prices fell 1.55% today to $3268 an ounce, with a session-high at $3331.

On Friday, gold  lost 0.9%, the third loss  in four days on profit-taking away  from a record high at $3500.

The precious metal lost 0.25% last week,  the first weekly loss in  three weeks as haven demand wobbled.

US Dollar

The dollar index rose 0.25% on Monday, extending gains for the second straight session against a basket of major rivals.

A stronger dollar makes the greenback-denominated gold futures costlier to holders of other  currencies.

The dollar’s latest rebound comes as concerns about a US recession receded with increasing positive signals about the global trade tensions.

Trade Developments

Reports indicated that China is considering tariff exemptions for some US products.

Chinese officials also asked the US to remove unilateral tariffs on China as a prerequisite for any trade negotiations. 

Trump already stated that trade talks are currently ongoing with China, despite the latter’s assertions that no official talks are currently taking place.

US Rates

Several Fed officials recently signalled there’s no need to cut interest rates soon as the Fed continues to analyze new data to gauge the impact of US tariffs on the economy.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stand at only 9%, while the odds of such a cut in June stand at 63%.

SPDR

Gold holdings at the SPDR Gold Trust fell 2.29 tons on Friday to a total of 946.27 tons, the lowest  since April 9.