Gold is steady amid worry about global growth
Ongoing US-China trade standoff, evidenced by President Donald Trump’s comment on Friday, props up bullion prices
Gold prices held steady in holiday-thin trade on Monday, holding near the key $1,500 pivot, as uncertainties around Sino-US trade war and concerns of slowing global economic growth offered support.
Spot gold was mostly unchanged at $1,496.42 per ounce in early-morning trading.
US gold futures were flat at $1,508.10 an ounce.
Many markets in Asia, including Singapore and Japan, were closed for a holiday on Monday.
On Friday, US President Donald Trump said he was not ready to make a deal with China and even called the September round of trade talks into question.
“One risk to higher gold prices has been [a lack of] resolution in the US-China trade talks, so the comment made by Trump on Friday clearly diminishes the likelihood of resolution soon,” ANZ analyst Daniel Hynes said.
White House trade adviser Peter Navarro said that the US is still planning to hold another round of trade talks with Chinese negotiators.
Earlier in August, Trump said he would impose a 10% tariff on the remaining $300bn in Chinese imports on September 1, prompting China to halt purchases of US agricultural products.
Last week, the US also accused China of being a currency manipulator after Beijing allowed the yuan to slip below seven to the dollar.
The escalation in trade war between the world’s biggest economies triggered a stellar rally in gold prices, which have risen nearly 6% in August.
“If we see continuation in the trade war, the outlook for gold remains positive; we do see prices stabilise around above $1,500. In the near term, there is every likelihood that we will continue see gold prices push higher,” Hynes said.
Worries about the damaging effects of the trade war were underscored by a warning from Goldman Sachs of the rising risk of a recession, and that it no longer expects a trade deal before the 2020 US presidential election.
Further indicative of an economic slowdown, data last week showed the British economy unexpectedly shrank for the first time since 2012 in the second quarter, while German industrial production suffered its biggest annual decline in nine years.
Meanwhile, hedge funds and money managers raised their bullish stance in Comex gold and trimmed net long positions in silver contracts in the week to August 6, the US Commodity Futures Trading Commission (CFTC) said on Friday.
Among other precious metals, silver edged 0.1% lower to $16.93 per ounce.
Platinum rose 0.3% to $861.29 and palladium gained 0.3% to $1,425.88 an ounce.
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