Gold price declines, another month for the losing streak

Gold prices are holding critical support above $1,200 an ounce, but according to some analysts, there is still much heavy lifting that needs to be done as the precious metal sees its longest monthly losing streak in five years.

August was a particularly rough month for the yellow metal as the price dropped to a 1.5 year low at the beginning of the month. While prices are off its lows, the market is still in a significant downtrend with Comex December gold futures last trading at $1,210 an ounce, down around 2% since the end of July. The gold market is seeing its worst losing streak since 2013 as the price is down 10% in the last five months.

Analysts have noted that the gold market remains at the mercy of the U.S. dollar. The U.S. Dollar Index continues to trade near a one-year high, testing critical resistance just below 95 points. Until sentiment in the U.S. dollar changes, analysts say that the yellow metal will continue to struggle.

“With the Dollar supported by the bullish sentiment towards the U.S. economy and expectations heightened over higher interest rates, the outlook for Gold remains tilted to the downside,” said Lukman Otunuga, research analyst at FXTM.

Justin McQueen, market analyst at DailyFx.com, warned in a report Friday that rising global trade tensions could continue to support the U.S. dollar. In an interview with Bloomberg, President Donald Trump said that he wants to impose an additional $200 billion in tariffs on imported Chinese goods.

Analysts have noted that the U.S. dollar has benefited from recent trade war rhetoric because investors think that strong economic growth will help the U.S. weather any potential economic storm.

Data compiled by the ETF shows that gold held in trust dropped by 42.39 tonnes in August. The latest data showed GLD holding totaling 757.81 tonnes.

“The drop off in gold ETF holdings poses a risk that gold could be heading lower once again,’ said McQueen.”