By Park Hyong-ki
Global investors are dumping and staying away from gold, while trying to get their hands on U.S. dollars amid the United States' growing trade disputes with China, the European Union and Turkey among others.
Gold futures for December delivery are barely trading above $1,200 an ounce, and spot gold reached $1,193, its lowest level in nearly 18 months, according to CME Group's New York Mercantile Exchange (NYMEX) Tuesday.
Investors are likely to remain bearish toward the bullion as the U.S. ups the ante against its trading partners, analysts say.
"Bullion's weakness has been going on longer than anyone expected. The market can expect it to continue in the latter half on the back of strong demand for dollars," said Kim Joong-hun, an analyst at Hana Financial Investment.
The dollar index against a basket of major currencies including the euro and Japanese yen has soared nearly 5 percent since April. Meanwhile, the price of gold fell 8 percent in the same period, according to Kim.
Bullion saw its last high of around $1,360 an ounce in early April.
Over the last four months, the U.S. Federal Reserve has signaled more interest rate hikes amid a rosy outlook for the world's largest economy. Also, the U.S. has increased its retaliatory measures against China.
Investors have sought U.S. dollars to buy Treasuries, a safe-haven investment asset, especially after the U.S. and China launched tariff countermeasures against each other.
The value of the Turkish lira has also lost over 45 percent since early this year. The U.S. announced recently that it would impose tariffs on steel and aluminum imports from Turkey.
An increase in the market interest rate, for instance, would drive investors' attention away from bullion to assets that offer higher yields such as bonds, analysts say. Bond prices move inversely to yields.
Usually, the values of the dollar and gold have gone hand in hand in an inverse relationship.
As gold is priced in dollars, a stronger dollar would make it expensive for investors or economies with other currencies to purchase gold. Thus, a strong dollar would lower the demand for gold.
Global investors are dumping and staying away from gold, while trying to get their hands on U.S. dollars amid the United States' growing trade disputes with China, the European Union and Turkey among others.
Gold futures for December delivery are barely trading above $1,200 an ounce, and spot gold reached $1,193, its lowest level in nearly 18 months, according to CME Group's New York Mercantile Exchange (NYMEX) Tuesday.
Investors are likely to remain bearish toward the bullion as the U.S. ups the ante against its trading partners, analysts say.
"Bullion's weakness has been going on longer than anyone expected. The market can expect it to continue in the latter half on the back of strong demand for dollars," said Kim Joong-hun, an analyst at Hana Financial Investment.
The dollar index against a basket of major currencies including the euro and Japanese yen has soared nearly 5 percent since April. Meanwhile, the price of gold fell 8 percent in the same period, according to Kim.
Bullion saw its last high of around $1,360 an ounce in early April.
Over the last four months, the U.S. Federal Reserve has signaled more interest rate hikes amid a rosy outlook for the world's largest economy. Also, the U.S. has increased its retaliatory measures against China.
Investors have sought U.S. dollars to buy Treasuries, a safe-haven investment asset, especially after the U.S. and China launched tariff countermeasures against each other.
The value of the Turkish lira has also lost over 45 percent since early this year. The U.S. announced recently that it would impose tariffs on steel and aluminum imports from Turkey.
An increase in the market interest rate, for instance, would drive investors' attention away from bullion to assets that offer higher yields such as bonds, analysts say. Bond prices move inversely to yields.
Usually, the values of the dollar and gold have gone hand in hand in an inverse relationship.
As gold is priced in dollars, a stronger dollar would make it expensive for investors or economies with other currencies to purchase gold. Thus, a strong dollar would lower the demand for gold.
