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Gold tumbles to three-week low as investors bail out

PROSPECTING GOLD
AP

Gold prices slumped to three-week lows on Friday as disappointed speculators liquidated long positions despite fresh trade skirmishes between the United States and China.

Some investors had taken long positions ahead of key central bank decisions this week, but gold only briefly surged to a one-month peak on Thursday of $1,309.30 before retreating when the dollar strengthened.

"After it was clear today that gold had failed to clear the $1,300 level, people rushed to the exit," a trader in Europe said.

Spot gold was down more than 1.5 percent and hit its weakest since May 21, while U.S. gold futures for August delivery settled $29.80 lower at $1,278.50 per ounce.

"The dollar has been waking up to some renewed strength and that's largely been held onto today," said Jonathan Butler, commodities analyst at Mitsubishi in London.

The dollar index , was slightly firmer after hitting the highest since November last year.

Gold deepened losses after President Donald Trump on Friday announced that the United States will implement a 25 percent tariff on $50 billion of goods from China and Beijing quickly said it would hit back with its own tariffs.

Analysts had expected gold to be bolstered by the prospects of a trade war. The International Monetary Fund said on Thursday that Trump's new tariffs threatened to undermine the global trading system, would prompt retaliation by other countries and damaged the U.S. economy.

Global and U.S. equities have failed to revisit their record highs despite some strong first-quarter profit reports, stoking fears of a correction, which may benefit gold, Butler said.