Gold is hardly changed amid trade talk uncertainty
Bengaluru — Gold prices held firm on Monday, supported by worries over a slowdown in global economic growth and uncertainties around China-US trade war, but a strong dollar limited the safe-haven metal’s appeal.
Spot gold was marginally lower at $1,312.76/oz, as of 2.54am GMT, while US gold futures fell 0.2% to $1,316.50/oz.
“Global growth worries, absence of positive signs in US-China trade [talks] and reduction in the eurozone growth forecasts have laid a strong foundation for gold in the longer run,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.
“There are a lot of headwinds for gold in the near-term from the six-week rally in US equities and a vigorous dollar.”
Investors are looking ahead to trade talks between Beijing and Washington this week with a delegation of US officials travelling to China for the next round of negotiations. US President Donald Trump said last week that he had no plans to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal.
Trump has vowed to increase US tariffs on $200bn worth of Chinese imports if the two sides cannot reach a deal by 5.01am GMT on March 2.
Trade tensions between the world’s top two economies have rattled financial markets since last year and also boosted the appeal of the US dollar as a safe-haven.
The dollar index was hovering near a more than one-month high touched in the previous session.
A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
Gold slumped to a more than one-and-a-half-year low in mid-August to $1,159.96 on rising interest rates and a strong dollar. But, tumultuous stock markets and expectations of a pause in interest rate hikes this year helped gold touch a nine-month high at $1,326.30 in late January.
Tighter financial conditions since last September make further interest rate hikes seem much less necessary than just a few months ago, San Francisco Federal Reserve Bank president Mary Daly said on Friday.
While gold is supported by the Fed's dovish policy, prices will likely remain range-bound until there is clarity on the trade front and US government shutdown, Oanda analyst Edward Moya said in a note.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), saw outflows for five consecutive sessions last week.
Talks on border security funding collapsed after Democratic and Republican legislators clashed over immigrant detention policy as they worked to avert another US government shutdown.
Meanwhile, spot silver dropped 0.2% to $15.79/oz.
Palladium fell 0.5% to $1,395/oz, while platinum was down 0.5% at $794.