Gold. Picture: REUTERS
Gold. Picture: REUTERS

Bengalur — Gold prices on Thursday held steady near a more than one-week high hit in the previous session, with the hope for a new round of US-China trade talks weighing on the dollar.

Spot gold was firm at $1,205.16/oz at 3.17am GMT, after hitting its highest since August 31 at $1,208.48 on Wednesday. Bullion gained 0.7% in the previous session, its biggest one-day rise since August 24.

US gold futures were also mostly steady at $1,210.50/oz.

Senior US officials sent an invitation to their Chinese counterparts to hold another bilateral trade meeting, raising speculation about a subtle shift in Washington’s policy.

The outreach comes as more than 85 US industry groups launched a coalition on Wednesday to take a fight public against President Donald Trump’s trade tariffs.

"Signs of movement in Sino-US trade talks is the proximate cause [for steady prices], with a market that is still short and probably more sensitive to news, favouring the upside for gold," said Nicholas Frappell, global general manager at ABC Bullion, Australia.

The months-long trade rift between US and China has prompted investors to buy the dollar in the belief that the US has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange traded funds (ETFs).

Extended short positions could possibly lead to a squeeze and push prices up, Frappell said.

Gold prices have fallen nearly 12% since a peak in April amid intensifying global trade tensions and under pressure from rising US interest rates.

Higher rates make non-yielding bullion less attractive, and tend to boost the dollar, in which gold is priced.

"Gold is trading entirely on the mercy of the US dollar … to judge gold by any other metric in this environment provides an indecisive, inconclusive and highly inconsequential signal," said Stephen Innes, Asia-Pacific trading head for Oanda.

The dollar index against a basket of six major currencies stood little changed at 94.812, near a one-and-a-half-week low of 94.733 marked in the previous session.

Cross-asset traders were waiting for US consumer prices index data due later on Thursday for cues on the US dollar’s next move, Innes said.

The CPI data comes after soft US wholesale price data undermined the case for a faster pace of policy tightening by the Fed. The US central bank is widely expected to raise benchmark interest rates at its September meeting.

Among other precious metals, spot silver rose 0.2% to $14.23.

Platinum rose 0.3% at $801.10, after touching a two-week high of $802.70. Palladium was up 0.1% at $975.50.