Gold remains flat as attention turns to US-China trade talks

Bengaluru — Gold prices were little changed on Thursday following a steep fall in the previous session, as investors waited on any Sino-US trade developments later this week, while bulls rolled back hopes of big US interest rate cuts.

Spot gold was down 0.1% at $1,407.25/oz at 3.50am GMT.

Prices fell more than 1% in the previous session after US Federal Reserve officials dented expectations of aggressive interest rate cuts.

US gold futures were 0.3% lower at $1,411/oz.

“There appears to be some fatigue around preannouncements on the trade issues … If we don’t see any sort of agreement, then we can see support for gold coming back, but in the meantime that modulation is expected to weigh on gold prices,” said Michael McCarthy, chief market strategist at CMC Markets.

“This looks like a corrective action at the moment,” he said, adding that a slight uptick in the US dollar is also pressuring gold prices.

US President Donald Trump on Wednesday said a trade deal with Chinese President Xi Jinping was possible this weekend but warned he was prepared to impose US tariffs on virtually all remaining Chinese imports if talks fail.

Trump raised the possibility that he may impose a lower, 10% duty on a $300bn list of Chinese imports, instead of the proposed 25% rate.

He also weighed into US monetary policy, accusing Fed chair Jerome Powell of doing a “bad job” and “out to prove how tough he is” by not cutting interest rates.

This comes after Powell said the central bank was “insulated from short-term political pressures”, pushing back against Trump’s demand for a significant rate cut.

The latest comments from Fed officials lifted the US dollar from three-month lows touched earlier this week.

“Even though the Fed has hinted at an upcoming rate cut, the comments of 50 basis points being too much could end up with the central bank holding rates steady if economic indicators rebound in the short term,” Alfonso Esparza, a senior market analyst at Oanda, said in a note.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22% to 797.85 tons on Wednesday.

On the technical side, spot gold may stabilise around a support at $1,404/oz, and bounce towards a resistance at $1,421, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver edged 0.1% higher to $15.25/oz, while platinum fell 0.3% to $811.41.

Palladium rose 0.3% to $1,527/oz.

Reuters