Gold dips as easing concerns over trade war support dollar

Gold prices edged lower on Monday, as the dollar firmed on easing fears of an escalation in the US-China trade war after a report that the US does not plan to delist Chinese companies from US stock markets.

The White House is not contemplating blocking Chinese companies from listing shares on US exchanges at this time, Bloomberg quoted Treasury spokesperson Monica Crowley as saying on Saturday.

This came after Reuters reported on Friday the US administration was considering delisting Chinese companies from US stock markets.

“For the short term there is some confusion considering the contradicting headlines we are getting on the trade war,” said AxiTrader market strategist Stephen Innes.

“In these situations what investors do is quit their position in equities and switch to bond markets,” said Innes, adding that this boosted the dollar and in turn made gold expensive.

Spot gold fell 0.3% to $1,492.30 per ounce by 6.18am SA time, after hitting its lowest since September. 18 at $1,486.60 in the previous session.

US gold futures for December delivery fell 0.5% to $1,498.80 per ounce.

Meanwhile, ahead of trade talks with the US, Chinese vice-commerce minister Wang Shouwen said on Sunday the two major economies would resolve their trade dispute “with a calm and rational attitude”.

“The gold market is looking for clarity on the trade war front while the Federal Reserve narrative has been less dovish,” Innes said.

Philadelphia Federal Reserve Bank president Patrick Harker said on Friday he opposed the central bank’s September rate cut and that the Fed should “hold firm” on interest rates.

Higher interest rates boost the dollar, making dollar-denominated gold more expensive for buyers using other currencies and reducing investor interest in non-yielding bullion.

“Overall, gold remains stuck in a wider $1,480 to $1,530 an ounce longer-term trading range,” Oanda analyst Jeffrey Halley said in a note, adding that a trade or some other geopolitical catalyst is needed to break the range.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22% to 922.88 tons on Friday.

Hedge funds and money managers raised their bullish positions in Comex gold and reduced bullish bets on silver contracts in the week to September 24, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Among other precious metals, palladium was up 0.8% at $1,694.77 per ounce, after hitting a record high at $1,695.14 earlier in the session.

Silver fell 0.8% to $17.40 per ounce and platinum was down 0.3% to $927.68 per ounce.

Reuters