Gold prices rise as easing trade tension weighs on dollar

Bengaluru — Gold prices edged up on Friday to a one-week high as the dollar weakened on receding fears of a full-blown China-US trade war, keeping the metal on track for its first weekly gain in four.

Spot gold added 0.1% to $1,208.0 by 2.52am GMT, after touching its highest since September 13 at $1,210.01. It has risen 1.3% so far this week.

US gold futures were up 0.1% at $1,212.70 an ounce.

“Higher gold prices are due to the fact that China-US trade tensions have somewhat dissipated,” OCBC analyst Barnabas Gan said.

“Right now we have to tread very carefully on gold as any uptick in trade tension is bearish. US tariffs should actually improve trade balance in the US and should give more strength to the dollar and push gold prices down.”

New US and Chinese tariffs on each other’s goods were set at lower rates this week than previously expected, raising hope that hostilities between the world’s two largest economies may be easing.

Investors have been buying the dollar believing that the US has less to lose from the dispute. But the dollar has weakened this week, with investor flows being diverted away from the greenback to its peers such as emerging-market currencies as trade war concern has ebbed.

The dollar index was hovering near a 10-week low against a basket of major currencies.

Gold has declined about 11.6% from a peak in April, hurt by the intensifying US-China trade dispute and on rising US interest rates.

Investors are awaiting next week’s Federal Reserve meeting.

The US central bank is widely expected to raise benchmark interest rates and shed light on the path for future rate hikes.

Markets are pretty much already positioned in anticipation of US rate hikes, analysts said.

“There are some underlying questions over what the outlook towards US monetary policy in 2019 could be,” said Jameel Ahmad, global head of currency strategy and market research at FXTM.

“But due to the other external uncertainties in the atmosphere including and not limited to trade tensions and a US midterm election within two months, it is possible that investors will be prepared to give the Fed more time.”

Among other precious metals, spot silver rose 0.6% to $14.35, after rising to a two-week high of $14.387.

Palladium, which touched its highest since April 19 at $1,054.80 an ounce on Thursday, was last down 0.1% at $1,048.50.

Platinum hit its highest since August 9 at $836.40.

Reuters