Gold jewellery. Picture: AFP PHOTO/NOAH SEELAM
Gold jewellery. Picture: AFP PHOTO/NOAH SEELAM

Bengaluru — Gold held steady on Friday on worries that a prolonged China-US trade war could worsen global economic slowdown, but a strong dollar put bullion on track for its first weekly loss in three.

Spot gold was steady at $1,309.34/oz, as of 3.20am GMT, after the metal hit its lowest since January 29 at $1,302.11 on Thursday.

US gold futures were also unchanged at $1,313.10.

US President Donald Trump said on Thursday he did not plan to meet Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal. The two countries had taken a 90-day hiatus in their trade war to work out a deal.

Stocks pulled back sharply around the world on fears of a global growth slowdown spreading to Europe and uncertainties around US-China trade tensions.

“Some of our growth indicators are clearly seeing easing global activity and trade volumes are being hit. That makes people cautious and could derive support for gold around $1,300-$1,330 range,” said John Sharma, an economist with National Australian Bank.

The European Commission on Thursday sharply cut its forecasts for eurozone economic growth this year and next on the expectation the bloc’s largest countries will be held back by global trade tensions and domestic challenges.

“People are still not sure in what direction the trade war might go,” Sharma said, adding that the US dollar’s strength was also capping gold’s gains.

The dollar index, a gauge of its value versus six major peers, was hovering close to its two-week high.

“The negative trade talk headlines saw some safe-haven buying re-emerge,” ANZ analysts said in a note, adding that sharp falls in equity markets had been supportive for gold.

Bullion prices have risen about 13% since touching more than one-and-a-half-year lows in August, mostly due to volatile stock markets, a pull-back in dollar and dovish US Federal Reserve.

But, a strong dollar, which makes bullion more expensive for holders of other currencies, has driven gold down 0.6% for this week.

Gold’s pull back from a nine-month high of $1,326.30 touched last week has driven outflows in the world's largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust.

SPDR gold holdings fell for a fifth straight session on Thursday, shedding more than 1% for the week in what could be their worst fall since the week ended October 7.

Among other precious metals, silver was down 0.1% at $15.70/oz.

Palladium stood firm at $1,386/oz and platinum was 0.4% lower at $793.

Reuters