Gold marks time in cautious climate over China-US trade talks

Bengaluru — Gold prices held steady on Tuesday as investors kept a cautious stance ahead of a fresh round of China-US trade talks, while a firmer dollar capped gains for bullion, which was drawing support from global economic slowdown worries.

Spot gold was firm at $1,308/oz, as of 3.41am GMT, after falling 0.4% in the previous session.

US gold futures were also mostly unchanged at $1,312.20/oz.

“Gold is being pushed around by the US dollar in the near term. Traders are getting out of anything to do with Europe on concerns of weakness in the region and going for safe-haven buying into US treasuries, which is pushing up the dollar,” said Kyle Rodda, market analyst at IG Markets.

When investors buy US treasury bonds, they are also required to purchase the greenback, which makes dollar-denominated gold more expensive for holders of other currencies, potentially subduing demand.

“Gold is still very resilient and should trade in the range of $1,305-$1,320, with investors looking for headlines around trade talks, US government shutdown and data from US and China for signs of weakness in the economy,” Rodda said.

A new round of trade talks between China and the US started in Beijing on Monday with world’s two largest economies trying to hammer out a deal before a March 1 deadline, after which US tariffs on $200bn worth of Chinese imports are scheduled to increase to 25% from 10%.

China-US trade tensions have rattled financial markets since 2018 and also underpinned the dollar’s safe-haven appeal.

The dollar index was steady at 97.05, after advancing 0.4% in the previous session in its largest percentage gain since January 24.

“Ongoing trade tensions and concerns about weaker global economic growth continue to provide a level of support in the gold market,” ANZ analysts said in a research note.

Meanwhile, US congressional negotiators said late on Monday they had reached a tentative deal on border security funding that would avert another partial government shutdown due to start on Saturday, but provided no details.

Investors are worried about the economic impact of US government shutdown when global growth is already lean.

Among other metals, silver inched up 0.1% to $15.67.

Palladium traded steady at $1,385/oz, while platinum rose 0.5% to $785.50/oz. In the previous session, the metal touched $779.50, its lowest since January 2.

Reuters