Ancient Roman gold coins. Picture: REUTERS
Ancient Roman gold coins. Picture: REUTERS

London — Gold was steady on Wednesday, failing to break from a narrow trading range as investors remained concerned about a simmering trade war between the United States and China.

Spot gold was off just 0.07% at $1,196.70 an ounce at 10.02am GMT, after hitting its lowest since August 24 at $1,187.21 on Tuesday. US gold futures were steady at $1,202.20 an ounce.

The trade conflict between Washington and Beijing has prompted investors to buy the US dollar in the belief that the US has less to lose from the dispute.

"It looks like gold will remain in a sideways trend until something forces it either way," Commerzbank analyst Daniel Briesemann said, adding that given the uncertainty in the world "gold will go much higher before the year is out".

Gold has been stuck in a $20 price range over the past two weeks, with investors looking for technical breakouts for clues on further movements.

Gold has lost out to the dollar in a battle for safe-haven flows. A firmer dollar makes gold more expensive for holders of other currencies but on Wednesday the dollar was marginally lower against a basket of currencies.

In addition, a sell-off in the Chinese yuan made the metal more expensive for buyers from the world's top consumer of the metal.

"Gold is moving without a clear direction and it seems locked between $1,190 and $1,200," ActivTrades chief analyst Carlo Alberto De Casa said.

"Investors are awaiting new moves to see if bullion can prolong the weak recovery seen in the second half of August, even if the main trend still appears bearish."

The US central bank is widely expected to raise benchmark interest rates at its September meeting and expectations are growing for one more hike in December on positive economic data.

Higher rates increase bond yields, making nonyielding bullion less attractive, and tend to boost the dollar.

Central bank meetings in Turkey and Russia are also on investors' radar this week, with particular market focus on whether Ankara will step in to fight inflation and a depreciating currency, Commerzbank's Briesemann said.

Gold has fallen more than 12% from a peak in April, pressured by rising US interest rates amid intensifying global trade tension.

Spot silver was up 0.6% at $14.18 per ounce, having touched $13.90 in the previous session, its lowest since January 2016. Platinum was down 0.3% to $785 per ounce, while palladium lost 0.6% to $969 an ounce.