A man holds necklaces in a gold shop in Chinatown in Bangkok, Thailand. Picture: REUTERS/SOE ZEYA TUN
A man holds necklaces in a gold shop in Chinatown in Bangkok, Thailand. Picture: REUTERS/SOE ZEYA TUN

Bengaluru — Gold prices were slightly lower on Thursday as the dollar firmed on renewed trade tensions, but a decline in global equities helped keep prices near the five-week high hit this week.

Spot gold was down 0.1% at $1,236.23/oz at 11.04am GMT, while US gold futures were 0.1% lower at $1,241.50/oz.

“This is a modest decline, not yet impacting the main trend which still remains moderately positive,” said ActivTrades chief analyst Carlo Alberto De Casa.

“If gold could hold above $1,235, this is definitely a very good signal, while surpassing $1,243 would open space for further recoveries.”

The dollar gained after the arrest of a top executive at Huawei fed new worries over the China-US trade war.

Concern about a possible US recession and an inversion in part of the treasury yield curve has pressured the greenback, making bullion less expensive for holders of other currencies.

Gold has recovered about 7% from the 19-month lows hit in mid-August and on Tuesday rose to $1,241.86, its highest since October 26.

“Everything points to rising [gold] prices … technical signals and the seasonal effects are positive, and on top of that the stock market is signalling a global economic crisis,” said Alasdair Macleod, head of research at GoldMoney.com.

“The Group of 20 [G20] accord whereby America agreed to defer the next round of tariffs against China by 90 days has not convinced the market. The result was that we saw a big fall in Wall Street and indications are that fall will continue.”

Global stock markets slumped for a third day running on Thursday.

“The [gold] market is looking for reasons to push higher, but not whilst we wait for another rate hike,” said SP Angel analyst John Meyer.

“The US Federal Reserve may go for a rate increase in December. The dollar may strengthen and that may weigh on gold prices on a short-term basis.”

The central bank is widely expected to raise rates at its policy meeting on December 18-19 and investors are keeping a close eye on signals for the future path of rate hikes.

Higher interest rates increase the opportunity cost of holding non-yielding bullion.

Palladium prices stayed near gold’s after outshining the yellow metal for the first time since 2002 on Wednesday as prices have soared about 50% in less than four months to record levels.

Spot palladium dropped 2.1% to $1,217.70/oz on profit-taking after rising to a record high of $1,263.56/oz in the previous session.

“There is a very, very severe shortage of palladium for delivery,” Macleod said.

Silver fell 1% to $14.36/oz, while platinum extended losses into a third session, declining 1.2% to $790.70/oz.