Bengaluru — Gold prices held near the more than two-week low hit in the previous session on Wednesday as the dollar strengthened, while signs of an escalation in China-US trade tensions weakened risk appetite and limited further declines.
Spot gold was down 0.1% at $1,273.03 an ounce by 10.56am GMT, having fallen to its lowest level since May 3 on Tuesday at $1,268.97. US gold futures were steady at $1,273.60 an ounce.
“We are seeing a strong dollar, which has been weighing on gold prices; that’s really been the key element in recent days,” said Capital Economics analyst Ross Strachan.
The dollar index firmed, hovering near a one-month high, boosted by higher US treasury yields after Washington temporarily eased trade restrictions imposed last week on Chinese telecoms tech firm Huawei.
However, equity markets pulled back on Wednesday as relief over the Huawei move evaporated on reports that the White House is considering further sanctions on Chinese video surveillance firm Hikvision.
Gold is now more than 5% below its late February peak of $1,346.73 an ounce.
Markets are looking to the release of the minutes of the US Federal Reserve’s latest meeting at 6pm GMT for clues on interest rate outlook.
“When the Fed minutes are released there will be a knee-jerk reaction on the dollar, which in turn will impact gold,” said David Govett, head of precious metals at Marex Spectron. “But in the long-term, the impact will be very little because the statement is expected to be very neutral.”
Earlier this week, Fed chair Jerome Powell said it would be premature to make a judgment about the impact of trade and tariffs on monetary policy.
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.4% to 739.69 tonnes on Tuesday. However, holdings have declined nearly 7% so far this year, indicating subdued investor interest in bullion.
On the technical side, spot gold may now test support at $1,264 an ounce, a break below which could open the way towards $1,244, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver fell 0.3% to $14.40 an ounce. Platinum slipped 1.1% to $804.21 an ounce, while palladium was down 0.6% at $1,311.55.