Senior refinery technician Vincente Sandoval puts a gold ‘button’ into a furnace to be further refined to form gold doré bars at Newmont Mining’s Carlin gold mine operation near Elko, Nevada, the US. Picture: REUTERS/RICK WILKING/FILE PHOTO
Senior refinery technician Vincente Sandoval puts a gold ‘button’ into a furnace to be further refined to form gold doré bars at Newmont Mining’s Carlin gold mine operation near Elko, Nevada, the US. Picture: REUTERS/RICK WILKING/FILE PHOTO

Bengaluru — Gold prices edged higher on Friday as optimism over US-China trade talks pressured the dollar, but signs of the US Federal Reserve raising interest rates again in 2019 capped gains.

Spot gold inched 0.1% higher to $1,324.59/oz at 4.08am GMT. The metal was headed for a second consecutive weekly rise, up almost 0.3%. The precious metal had hit a 10-month high on Thursday, but later erased the gains.

US gold futures were subdued at $1,327.70/oz.

“On a day-to-day basis, gold is a function of changing currency markets and the US dollar. Medium outlook is a lot more to do with geopolitical issues and yields,” said Kyle Rodda, a market analyst with IG Markets.

The dollar index against a basket of six major currencies was set to decline about 0.3% this week, which could be its biggest weekly fall in a month.

“The fact that gold was overbought-driven very much by a new yield environment and tensions around the world has helped keep gold prices elevated,” Rodda said.

Gold had hit a 10-month high of $1,346.73 on Wednesday, but minutes from the Fed’s January policy meeting indicated there might in fact be a rate hike this year, erasing gains in gold.

“Dovish signals from US Federal open market committee officials for the shorter term have kept global equities steady whilst applying bearish pressures on the noninterest bearing asset,” Phillip Futures said in a note.

Higher interest rates reduce investor interest in nonyielding bullion.

Markets were looking for further indications of progress on trade talks with US and Chinese negotiators resuming high-level talks on Thursday to hash out a deal that could end their trade war, just more than a week before a US-imposed deadline.

The US and China have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet towards ending a seven-month trade war, according to sources familiar with the negotiations, Reuters reported.

Indicative of investor sentiment toward bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.63% to 789.51 tons on Thursday.

Meanwhile, palladium was up 0.3% to $1,473.00/oz, having surpassed the key $1,500 level for the first time on February 20.

The autocatalyst metal was on track for a third consecutive week of gains, up nearly 3%.

Platinum gained 0.6% to $824, and was set for its best week since early January.

Silver was little changed at $15.81/oz. It was on course to snap two consecutive weekly losses.

Reuters