Gold slips to almost one-week low
Metal declines for a third straight session weighed down by a firmer dollar
Bengaluru — Gold prices slipped to a near one-week low on Tuesday, declining for a third straight session, weighed down by a firmer dollar ahead of upcoming trade talks between China and the US.
Spot gold eased 0.2% to $1,491.05 an ounce as of 4.44am GMT. Prices had dropped 1% in the previous session.
US gold futures fell 0.5% to $1,496.40 an ounce.
“One of the key factors to the gold market is the outlook for global growth, and with trade developments between US and China, traders are on alert,” said Michael McCarthy, chief market strategist at CMC Markets.
Top-level trade talks are scheduled to resume on Thursday, when Chinese vice-premier Liu He meets US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin.
“The market is very vulnerable to headlines. Any further news on discussions in the US with negotiators in China could be very important,” McCarthy said.
Asian shares inched up in early trade, though caution prevailed as expectations of a trade deal dimmed after Washington blacklisted Chinese companies over Beijing’s treatment of predominantly Muslim ethnic minorities and President Donald Trump said a quick trade deal was unlikely.
The uncertainty regarding the outcome of trade talks had pushed the dollar index higher overnight. A stronger US currency makes dollar-denominated gold more expensive for holders of other currencies, which could subdue demand.
The talks are to proceed ahead of a scheduled increase in US tariffs on $250bn worth of Chinese goods to 30% from 25% on October 15. Trump has said the tariff increase will take effect if no progress is made in the negotiations.
Data from China on Tuesday did little to cheer markets after the services sector grew at its slowest pace in seven months in September, despite a strong increase in new orders.
“For the moment we are fairly in a trading range. There is support between $1,480 and $1,490, and resistance around $1,525 to $1,530,” McCarthy said.
Investors now await the US Federal open market committee’s minutes from its September meeting, due on Wednesday, for clues on whether the Fed will cut rates at its October meeting, in what could be its third interest rate cut in 2019.
Among other precious metals, silver dropped 0.2% to $17.40 an ounce, while platinum rose 0.4% to $879.58 and palladium gained 0.5% to $1,667.76.