Gold holds near more than one-week high as trade talks weigh on the dollar

Bengalur — Gold prices on Thursday held steady near a more than one-week high hit in the previous session, with the hope for a new round of US-China trade talks weighing on the dollar.

Spot gold was firm at $1,205.16/oz at 3.17am GMT, after hitting its highest since August 31 at $1,208.48 on Wednesday. Bullion gained 0.7% in the previous session, its biggest one-day rise since August 24.

US gold futures were also mostly steady at $1,210.50/oz.

Senior US officials sent an invitation to their Chinese counterparts to hold another bilateral trade meeting, raising speculation about a subtle shift in Washington’s policy.

The outreach comes as more than 85 US industry groups launched a coalition on Wednesday to take a fight public against President Donald Trump’s trade tariffs.

“Signs of movement in Sino-US trade talks is the proximate cause [for steady prices], with a market that is still short and probably more sensitive to news, favouring the upside for gold,” said Nicholas Frappell, global general manager at ABC Bullion, Australia.

The months-long trade rift between US and China has prompted investors to buy the dollar in the belief that the US has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange traded funds (ETFs).

Extended short positions could possibly lead to a squeeze and push prices up, Frappell said.

Gold prices have fallen nearly 12% since a peak in April amid intensifying global trade tensions and under pressure from rising US interest rates.