Metals Stocks: Gold Edges Lower, Pinned Down By Stronger Dollar And Forced Liquidation

U.S. stock-index futures pointed to a lower start for Wall Street after another rout on Wednesday that was accompanied by selling across asset classes, including traditional havens like U.S. Treasurys, and a continued surge in demand for the U.S. dollar. The ICE U.S. Dollar Index DXY, +0.76%, a measure of the greenback against a basket of six major rivals, rose 1% Thursday after hitting a three-year high a day earlier.

Read:How a ‘disorderly’ U.S. dollar is amplifying the stock-market rout and adding to volatility

“Investor panic on financial markets has resulted in a liquidation of open positions and a flight to the most liquid assets, such as U.S. Treasurys and cash in dollars and Japanese yen,” said Georgette Boele, precious metals analyst at ABN Amro, in a note.

Worries about physical demand as a result of a global slowdown are also a drag on gold, while a rise in the Cboe Volatility Index VIX, +4.06% to an all-time high and continued strength in the dollar set up a negative environment for the metal, she said.

‘We expect financial markets to remain in a risk off mode in the coming weeks and months, which should result in more dollar strength and gold price weakness,” she said.