Gold declines to 1-1/5 year nadir, dollar inches lower

Gold futures fell over one percent in American trade to March 15, 2017 lows, while the dollar index leaned lower for the first time in four sessions, amid a lack of data from the US today. 

As of 02:58 GMT, gold futures due in December tumbled 1.18% to $1,204.60 an ounce, marking 1-1/5 year lows, while the dollar index slipped 0.16% to 96.20 against an array of main rivals, moving off June 28, 2017 highs. 

US President Donald Trump warned Canada in another tweet while lauding Mexico "Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of or there will be no deal. New President of Mexico has been an absolute gentleman. Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!".

Trump has repeatedly blasted the NAFTA trade deal with Mexico and Canada, describing it as the worst in US history and blaming it for harming US farmers and workers. 

US data released last week showed consumer prices rose 0.2% m/m in July as expected, accelerating from 0.1% in June, while core prices, excluding food and energy, rose 0.2% as expected with no change from June. 

On a yearly basis, consumer prices rose 2.9% as expected with no change as well, while core prices accelerated to 2.4% from 2.3%. 

The dollar index has strengthened recently against major currencies, marking the third weekly profit in a row and weighing on dollar-denominated commodity futures, on prospects of two more Federal Reserve rate hikes this year. 

World Gold Council  

The World Gold Council recently forecast an increase of demand on the yellow metal in the second half of 2018 as inflation rises and the global trade war takes firmer shape and hurts currencies. 

Despite similar concerns in the first half of the year, gold prices were stymied by dollar's strength as the Federal Reserve tightens monetary policy on the back of strong US data.  

Recently, the World Gold Council reported a 7% drop in global demand in the first quarter of 2018 to 973.5 tonnes, the lowest since the first quarter of 2008, as investments fell 27% on the precious metal to 287 tonnes from 383 tonnes in the first quarter of 2017. 

Central banks' gold demand rose 42% to 116.5 tonnes, especially from Russia, while jewelry demand steadied at 487.7 tonnes, as mine supplies grew 1% y/y to 770 thousand tonnes. 

Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, steadied at 786.08 tonnes on Friday, the lowest since February, 2016, after gold prices registered losses in July for the fourth month in a row.