Gold steady as trade tension keeps rand on the back foot
Bengaluru — Gold prices were steady on Tuesday as the US dollar remained on the back foot, with the metal supported by festering concern about US-China trade tension.
Spot gold was unchanged at $1,345.62/oz as of 3.22am GMT.
"Despite a quietening of negative headlines overnight, its unlikely we’ve seen the last of China trade tensions or a weaker US dollar for that fact. All of which continues to provide the most apparent reasons to own gold," said Stephen Innes, head of trading for Asia-Pacific for Oanda in Singapore.
Against the yen, the dollar was down 0.1% at ¥107.03, off its seven-week high of ¥107.78 touched on Friday as traders braced for a meeting between US President Donald Trump and Japanese Prime Minister Shinzo Abe starting on Tuesday.
The dollar index, which measures the greenback against a basket of currencies, also eased to 89.371 earlier, following a 0.4% fall on Monday. Meanwhile, the likelihood that there would be no immediate military escalation in Syria following the weekend missile strikes by the US, Britain and France, improved investor appetite for risk and dented gold’s appeal.
"In my view geopolitical events tend to have short-lived impact on gold prices unless they have far reaching economic consequences. So in this sense, the Russian/Chinese sanctions are far more important to the world economy and to gold as opposed to one-off strikes in Syria," said INTL FCStone analyst Edward Meir.
The US accused Russia on Monday of blocking international inspectors from reaching the site of a suspected poison gas attack in Syria and said Russians or Syrians might have tampered with evidence on the ground.
Gold is often seen as an alternative investment at times of political and financial uncertainty.
The US yield curve reached it flattest level in over a decade on Monday after the White House said Trump would nominate Richard Clarida as Federal Reserve vice-chairman, adding another hawkish voice at the central bank.
Higher rates tend to boost the dollar, making greenback-denominated gold more expensive for buyers using other currencies.
US gold futures eased 0.2% to $1,348.4/oz.
Meanwhile, silver was up 0.4% at $16.67/oz. Platinum was 0.4% higher at $927.45. Palladium was down 0.2% at $999.85/oz, after rising to $1,012.10/oz in the previous session, its strongest since March 1.