Gold flat as strong dollar offsets global stocks selloff

Gold was steady on Tuesday as pressure from the dollar's strength and a bullish U.S. rate outlook was balanced by falling stock markets.

Spot gold was unchanged at $1,188.20 per ounce as of 1422 p.m. EDT (1822 GMT), after earlier touching its lowest since Sept. 28 at $1,183.04.

Prices fell 1.2 percent the previous session, marking bullion's biggest one-day percentage decline since mid-August.

U.S. gold futures settled up $2.9, or 0.24 percent, at $1,191.5 an ounce.

"The (U.S.-China) trade war and pick-up in volatility (from the equity markets) are supportive factors offset by the ongoing situation of the expected rising interest rate environment," said David Meger, director of metals trading at High Ridge Futures.

Higher interest rates boost the dollar and bond yields, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

Against a basket of major currencies, the greenback hit a seven-week high, supported by high U.S. bond yields.

"The selling interest is being limited by the shaky stock market worldwide and strength of the dollar is limiting the upside," said Kitco Metals senior analyst Jim Wyckoff.

A four-day global sell-off pushed shares in Asia to a 17-month low and knocked European shares to six-month lows.

Wall Street edged lower after the International Monetary Fund said the U.S.-China trade war would hurt global growth and as a rebound in technology stocks lost steam.

The IMF cut its global economic growth forecast for the first time since 2016, citing pressure from trade tussles between the United States and China.

Gold has held in a $34 range for the last 1-1/2 months, which some analysts say suggests resilience, supported by concerns over economic growth in emerging markets and     inflationary pressure from soaring oil prices.

Others said physical buying would emerge at lower price levels.

However, the metal, traditionally considered a prudent store of value during political and economic uncertainty, has lost much of its safe-haven appeal this year with investors increasingly opting for the greenback instead, especially as the U.S.-China trade war unfolded and on rising U.S. interest rates.

"In the coming weeks, gold's focus is likely to shift to the U.S. midterm elections and the impact on the U.S. dollar," Standard Chartered said in a note.

Among other precious metals, spot silver rose 0.4 percent to $14.40. Platinum climbed 0.4 percent to $820.65 per ounce and palladium inched 0.4 percent lower to $1,070.50.