Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE
Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE

Bengaluru — Gold prices on Wednesday hovered near a one-month high hit in the previous session, as comments from US President Donald Trump dashed market hopes for a preliminary agreement with China, driving support for safe-haven assets.

Spot gold was up 0.1% at $1,478.81 an ounce, as of 4am GMT, while US gold futures were flat at $1,484.60. Bullion prices rose to their highest since November 7 on Tuesday after Trump said a deal with China might have to wait until after the US presidential election in November 2020.

Gold, which is seen as safe investment during times of political and economic stress, has gained about 15% so far this year, mainly due to the 17-month trade dispute and its effect on global economy.

Trump’s comments come shortly after he slapped tariffs on US steel and aluminium imports from Brazil and Argentina.

“Gold has benefited from strong safe-haven flows, equities tanked and the dollar fell as well. And, that’s the reason gold has risen overnight,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“President Trump saying a trade deal may not happen until after the US election next year and the passage of the second China bill in the House of Representatives will add to the extreme trade worries because the fear is China might just walk away from any trade negotiations,” Halley said.

The US House of Representatives approved a bill that would require Washington to toughen its response to Beijing’s crackdown on its Uighur Muslim minority, which investors fear can possibly deteriorate trade ties.

Dimming hopes of a trade deal further, US commerce secretary Wilbur Ross rejected any deadlines on a trade deal with Beijing and launched a fresh attack on telecom company Huawei.

Trump’s statement on Tuesday prompted investors to reduce their exposure to risk, with Asian shares extending their losses, while the US dollar slid to a one-month low, making gold more attractive.

Spot gold may rise to $1,492 an ounce, as it has cleared a resistance at $1,478, according to Reuters technical analyst Wang Tao.

In other precious metals, palladium dipped 0.2% to $1,851.94 an ounce, after scaling an all-time peak on December 2 at $1,861.71. Silver remained unchanged at $17.17, while platinum advanced 0.2% to $911.24 an ounce.

Reuters