Gold steadies as hopes for a US-China trade truce sees dollar drop

Bengaluru — Gold steadied on Wednesday as the dollar slipped from a two-month peak on hopes of a trade deal between the US and China, with the metal’s gains capped by rising global stock markets.

Spot gold was up 0.1% at $1,311.65 an ounce, as of 11.08am GMT, while US gold futures gained 0.1% to $1,314.60 an ounce.

“The fact that gold prices have been holding above the $1,300 level over the past few days is supporting the market and the  dollar index is somewhat weaker,” said Commerzbank analyst Eugen Weinberg. “Overall there is healthy demand from investors for gold.”

The dollar steadied against its peers, easing off a two-month peak hit in the previous session, on hopes of a US-China trade truce. The currency has, since last year, been the preferred refuge for investors concerned about the dispute.

US President Donald Trump said on Tuesday that he could see letting the March 1 deadline for reaching an agreement with China “slide for a little while”, if the two sides were close to a complete deal.

Gold rose to its highest since late April at $1,326.30 on January 31, but has lost ground since as the dollar rallied.

“I think there is a little bit of bargain hunting in the market after gold retreated from the recent highs,” Julius Bär analyst Carsten Menke said.

On the technical front, gold is still holding above the key $1,300 support level, which investors view as a positive sign.

“A jump above $1,325 could trigger a new climb, otherwise this lateral move could continue while investors wait for news on the US-China trade talks and other macro-economic data, confirming (or not) the economic slowdown forecast for 2019-2020,” said ActivTrades chief analyst Carlo Alberto De Casa.