Mubasher: Gold prices declined on Monday as anxieties over US-China trade tensions gave a push to the dollar, taking the shine off the precious metal’s safe-haven appeal, despite worries about a global economic slowdown.
By 9:10 am GMT, US gold futures fell 0.45% to $1,312.60 per ounce, while spot gold dropped 0.59% to $1,308.88 per ounce.
The US dollar index, which measures the greenback against six major rivals, rose 0.10% to 96.7370.
The US dollar index hit the highest level since 3 January, making the greenback-denominated gold more expensive for holders of other currencies.
A vigorous dollar came although the Federal Reserve has placed brakes on its multi-year monetary tightening cycle and dovish stance shown by several officials.
A strong US dollar is impeding gold in the short term, while the yellow metal faced a short-term negative bias in charts used by technical traders, Singapore-based Phillip Futures analyst Benjamin Lu told Thomson Reuters.
However, from a long-term view, gold is quite bullish, as “growth worries, absence of positive signs in US-China trade negotiations and reduction in the euro-zone growth forecasts have laid a strong foundation for gold,” Lu said.
While the precious metal is supported by the Fed’s policy, prices will likely remain range-bound, until there is clarity on the trade talks between Washington and Beijing and US government shutdown, OANDA analyst Edward Moya said in a note.
Market participants are looking ahead to trade negotiations between the world’s two biggest economies, as a delegation from Washington is heading to Beijing for the next round of talks.
US President Donald Trump threatened to raise US tariffs on $200 billion in Chinese goods, if both sides failed to hammer out a deal by 5:01 am GMT on 2 March.
Financial markets were rattled by US-Sino trade tensions since last year, while boosting the appeal of the greenback as a safe-haven.