Gold prices lift as demand for the dollar eases

Bengaluru — Gold prices rose on Wednesday along with equities as the US dollar softened, with markets showing little worry over the latest escalation in the US-China trade war.

Spot gold climbed 0.3% to $1,201.72 an ounce by 4.55am GMT.

US gold futures were up 0.3% at $1,206.50 an ounce.

The news on tariffs did not help the US dollar, and parallel gold strength probably reflects the markets having had this outcome mostly priced in since last week, Dailyfx currency strategist Ilya Spivak said.

China and the US plunged deeper into their trade feud on Tuesday after Beijing added $60bn in US products to its import tariff list in retaliation for President Donald Trump’s planned levies on $200bn in Chinese goods.

“Also, last week’s modest recovery in emerging market assets helped push up stocks more broadly, which trimmed haven demand for the dollar,” Spivak said.

Still, gold prices have declined about 12% since April, hurt by the intensifying US-China trade dispute and on rising US interest rates.

Investors have been buying the dollar in the belief the US has less to lose from the dispute. But a spot of weakness in the dollar may indicate investors are starting to worry about the impact of the tariffs on the US economy.

The dollar index, which measures the greenback against a basket of major currencies, was down 0.1%. “People are following the US dollar and looking for clues from the upcoming Federal Reserve meeting later this month,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.