Bengaluru — Gold prices edged up on Wednesday as political turmoil in Italy and concern about the US-China trade conflict spurred safe-haven demand, though a strong dollar limited gains for the metal.
Spot gold was 0.1% higher at $1,298.86 an ounce by 3.49am GMT. US gold futures for June delivery were nearly unchanged at $1,298.80/oz.
Rising political uncertainty in Italy and growing US-China trade tension should help gold hold a bid, said Stephen Innes, Asia-Pacific trading head at Oanda.
“But with the metal’s sensitivity to the dollar on full display, it is unlikely gold will move significantly higher until we reach the EU ‘crisis zone’ — which we are nowhere near at this stage.”
The dollar index, which measures the greenback against a basket of six major currencies, hovered near its six-and-a-half-month peak touched in the previous session.
Further supporting gold was a slide in Asian stocks, which extended a global sell-off on Wednesday as Italy’s political crisis rippled across financial markets.
Investors fear that repeat elections in the eurozone’s third-largest economy — which could come as soon as July — may become a de-facto referendum on Italian membership of the currency bloc and the country’s role in the European Union.
Gold is often seen as a safe investment during times of political and financial uncertainty.
The US said on Tuesday that it still holds the threat of imposing tariffs on $50bn of imports from China and will use it unless Beijing addresses the issue of theft of American intellectual property.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.35% to 851.45 tonnes on Tuesday.
In other precious metals, spot silver was down 0.1% at $16.34/oz.
Platinum fell 0.3% to $901.20/oz and palladium was 0.5% lower at $974.05/oz.