Gold prices hold steady after Trump’s state of the union speech

Bengaluru — Gold prices held steady on Wednesday after US President Donald Trump, in his state of the union speech, vowed to build a border wall, but gave little clarity over developments in the ongoing trade discussions with China.

Spot gold was steady at $1,314 per ounce at 4.31am GMT.

US gold futures were also steady at $1,318 an ounce.

Trump spoke in the chamber of the House of Representatives facing political discord over his demands that Democrats end their opposition to funding for a border wall he says is needed to stem illegal immigration and smuggled drugs.

“There is a likely risk of another government shutdown with President Trump still sticking to the rhetoric of erecting a border wall,” said Hitesh Jain, vice-president of Yes Securities, adding that a firmer dollar was capping gold’s gains.

“Market participants remain cognisant of the fact that global macro numbers are slowing. Gold as an investment avenue remains very much in the reckoning.”

Trump’s demand for $5.7bn in funding for a US-Mexico border wall triggered a historic 35-day partial government shutdown, which ended on January 25. Trump has threatened to resume the shutdown if he is dissatisfied with the negotiations.

Meanwhile, Dallas Federal Reserve president Robert Kaplan said on Tuesday that the Fed should leave interest rates where they are until the U.S. economic outlook is clearer, a process that in his view could take several more months.

The US central bank last week kept interest rates steady and promised to be “patient” before making any future adjustments.

“The recent Fed meeting indicated that they are going to be very patient given the impending slowdown and uncertain trade backdrop. Even if there is just one rate hike, it would be still seen as a dovish stance,” Jain said.

While Trump’s address did not have anything significant on the US-China trade front, senior US and Chinese officials are poised to start another round of trade talks in Beijing next week, two people familiar with the plans said on Tuesday.

Trump has vowed to increase tariffs on $200bn worth of Chinese imports to 25% from 10% currently if the two sides cannot reach a deal by 12.01am US time on March 2.

“Gold clearly seems to be struggling right now, unable to build on its recent upside momentum,” INTL FCStone analyst Edward Meir said in a research note.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.18% on Tuesday. Holdings have dropped for three straight sessions.

Among other precious metals, palladium fell 0.2% to $1,379 per ounce.

Silver was down 0.5% at $15.76 and platinum dipped 0.1% to $815. 

Reuters