Gold steadies, as investors eye US trade developments and jobs report

Bengaluru — Gold steadied on Wednesday, edging higher after slipping to a more than one-week low in the previous session.

The rise came as the dollar eased despite concern about an escalation in the trade conflict between the US and China.

Spot gold rose 0.2% to $1,193.31 at 3.55am GMT, after touching a more than one-week low at $1,189.20 on Tuesday.

US gold futures were up 0.1% at $1,199.70 an ounce.

“We are in a situation where it is completely a dollar-driven trade. Until we get a convincing breakout (in gold) … the markets are going to be reticent,” said Stephen Innes, Asia-Pacific trading head at Oanda.

“The dollar can actually see a bit a reversal on the fact that we are not seeing a big wave of panic as there hasn’t been any significant impact on US equity markets.”

He said gold prices would hover around $1,190-$1,210 range in the short term.

A stronger greenback makes dollar-priced gold costlier for non-US investors.

Fears of a hit to global growth from US President Donald Trump’s “America First” protectionist policies have kept markets in a state of heightened anxiety for much of this year.

Trump could follow through on plans to impose levies on $200bn more of Chinese imports after a public comment period on his proposed new tariffs on Chinese goods is set to end on Thursday.

Meanwhile, markets are closely watching an employment report on Friday, which could influence gold’s moves as investors look for clues on the pace of US interest rate increases.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding nonyielding assets such as bullion.

The yellow metal has lost about 8.4% this year amid rising US interest rates, trade disputes and the Turkish currency crisis, with investors parking their money in the dollar, undermining the metal’s safe haven status.

The bearish sentiment in gold has reflected in heavy liquidations in SPDR Gold, the world’s largest gold-backed exchange-traded fund. Holdings have fallen 14.2% since a peak in late April, and 1.1% to 746.92 tonnes on Tuesday.

Spot gold may break a support at $1,190 an ounce and fall towards $1,179, as suggested by its wave pattern, a projection analysis and a falling channel, according to Reuters technical analyst Wang Tao.

Spot silver was up 0.1% at $14.10, after falling to the lowest since January 2016 at $13.97 on Tuesday.

Platinum rose 0.3% to $778.60. Prices touched their lowest since August 16 at $761.80 in the prior session.

Palladium was up 0.3% at $982.75, after touching an 11-week peak at $988.47 on Tuesday.

Reuters

Source: businesslive.co.za