Gold steady near recent highs, as US-Chinese trade tension rises again

Bengaluru — Gold prices steadied on Friday below a one-month high hit in the previous session, and were on track for a second straight weekly gain amid concern about the US-China trade dispute.

Spot gold was steady at $1,301.34 an ounce at 4.05am GMT, after reaching its highest since May 15 at $1,309.30 an ounce on Thursday.

US gold futures for August delivery were 0.3% lower at $1,304.70/oz.

“We saw a little bit of selling early this morning, a little bit of profit-taking…. Gold was unable to hold above this (previous days highs), so again we are sitting back in sort of that $1,290-$1,305 range,” said MKS senior precious metals dealer Alex Thorndike.

Investors were keeping a close tab on trade tension between the world’s top two economies, he said, and if the US imposed tariffs on Chinese goods, gold could test the overnight highs of $1,309-$1,310.

US President Donald Trump had made up his mind to impose “pretty significant” tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tension.

With that deadline looming, investors continued to view gold as an excellent hedge against a possible equity market tumult if the trade war escalated beyond the status quo, said Stephen Innes, Asia-Pacific trading head at Oanda.

“An escalation of trade war could prove extremely disruptive for financial markets, so gold should hold its bid as we enter another phase of geopolitical uncertainty,” he said.

Asian shares wobbled as investors braced for US tariffs against China, while the euro flirted with two-week lows after a cautious European Central Bank indicated it would not raise interest rates for some time.

Meanwhile, the Bank of Japan maintained its ultra-loose monetary policy and downgraded its view on inflation in a fresh blow to its long-held 2% price goal.

In other precious metals, silver rose 0.1% to $17.15/oz, a day after it hit its highest since April 19 at $17.32 an ounce. The metal has risen about 3% this week.

Platinum was 0.1% higher at $900.80/oz after touching a two-week high of $912.80 on Thursday and was on course for its fourth straight weekly gain.

Palladium rose 0.1% to $1,008.66, but was headed for a small weekly decline.

Reuters