Picture: REUTERS
Picture: REUTERS

Gold prices rose on Monday as the dollar retreated against the yuan in reaction to US President Donald Trump saying he would delay an increase in tariffs on Chinese goods.

Spot gold rose 0.3% to $1,331.43/oz at 3.48am GMT. US gold futures were up 0.1% at $1,333.50.

The offshore yuan strengthened 0.2% to 6.685 yuan against the dollar, after hitting its highest level since mid-July, on the news that Trump will not raise tariffs on $200bn worth of Chinese imports to 25% from 10%.

Trump said on Sunday he would delay an increase in tariffs on Chinese goods that had been scheduled for later this week, citing “substantial progress” in US-China trade talks at the weekend.

“The dollar is weaker today after Trump’s extension of tariff deadline,” said Jeffrey Halley, senior market analyst at Oanda.

“Gold, as it moves into the European and New York trading session, might come under pressure from the stock market,” Halley said, adding that there will not be any sustained downward pressure until there is more information on the trade deal.

Asian shares scaled a five-month peak after Trump’s decision to extend the deadline improved appetite for riskier assets.

Gains in equity markets tend to decrease appeal for gold, which is considered a safe store of value during economic and political uncertainty.

“Gold prices, though hinting for a looming bearish correction on risk-on market sentiments, will remain firmly supported on rising economic uncertainties and heightened geopolitical risks in 2019,” Benjamin Lu, an analyst with Singapore-based Phillip Futures said in a note.

Meanwhile, spot palladium traded as high as $1,506.50/oz, propelled by a stark supply deficit, and was last up 0.4% at $1,503.50.

Platinum, which rose to its highest since late November, was up 0.8% at $847.50/oz.

The platinum group metals (PGMs) continued to rise as supply risks increased after SA’s Association of Mineworkers and Construction Union (Amcu) planned to extend a strike from Sibanye Gold to other PGM producers in the country, ANZ analysts said in a research note.

Amcu has been on strike at Sibanye’s bullion operations since mid-November and plans to extend the strike to its platinum mines as well as all other mines where the union has members.

Elsewhere, spot silver rose 0.2% to $15.95/oz.

Reuters