Gold gains as dollar stalls on US-China trade talks

Bengaluru — Gold rose on Tuesday’s slight pause in the dollar’s rally as the US and China continue talks aimed at ending their trade conflict.

Spot gold was up 0.3% at $1,312.45 an ounce at 10.52am GMT after falling 0.4% in the previous session. US gold futures gained 0.4% to $1,316.70.

“The sentiment [on Tuesday] morning is a little more constructive towards the deal,” said ING analyst Warren Patterson. “The [gold] price direction really hinges on how these trade talks play out. A positive outcome at trade talks could weigh on the dollar and that is constructive for gold prices.”

The dollar steadied after climbing to its highest level since mid-December, having been the preferred refuge for investors concerned about the trade row.

US trade representative Robert Lighthizer arrived in Beijing on Tuesday ahead of high-level trade talks to hammer out a deal ahead of a March 1 deadline.

Also on investors’ radar is a long-drawn stalemate in Washington over funding for a border wall with Mexico, as well as the continuing uncertainties surrounding Britain’s planned departure from the EU.

On Monday, US congressional negotiators reached a tentative deal to try to avert another partial government shutdown on Saturday. Investors are worried about the economic impact of a US government shutdown when global growth is already lean.

“Trade and geopolitical risks remain to underpin [gold] price action and we expect this to continue over the near-medium term, with supportive price interest remaining broadly towards $1,300 to $1,310,” MKS PAMP Group said in a note.

For the near term, gold is expected to stay above $1,300, which is seen as a critical support level in charts followed by technical traders, analysts said. 

“If we now see short-term resistance break around $1,315, then this could lead to further technical follow-up buying pressure towards — and possibly beyond — January’s high of $1,326,” said Forex.com analyst Fawad Razaqzada.

Among other metals, palladium was up 0.2% at $1,388.84 an ounce while silver gained 0.6% to $15.80. Platinum firmed 0.4% to $784.50 an ounce, having touched its lowest since January 2 at $779.50 in the previous session.

Reuters