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Gold rebounds from 5-week low as equity market rally stalls

Gold rebounds from 5-week low as equity market rally stalls

Mubasher: Gold prices edged up on Wednesday after bouncing back from an over five-week low in the prior session, as a rally in global stocks stalled, supporting the precious metal, but a firmer dollar capped gains.

 By 8:55 am GMT, spot gold declined 0.11% to $1,286.59 per ounce, having dropped to $1,280.70 in the prior session, the lowest level since 25 January, while US gold futures rose 0.26% to $1,288 per ounce.

Asian equities steadied on Wednesday as Chinese stocks rallied on stimulus hopes, despite regional tensions returned to the forefront, keeping a lid on broader gains.

“Gold is firming after the sharp fall as competing influences of the interest bearing assets are reversing,” Singapore-based Phillip Futures analyst Benjamin Lu told Thomson Reuters, adding that “bond yields have started to weaken gently, and while the dollar is going up, equities are seeing headwinds.”

The US dollar hovered near a two-week peak, reached in the preceding session.

By 8:54 am GMT, the US dollar index, a tracker of the greenback against a basket of six major peers, stabilised at 96.870.

Markets were looking for progress in the negotiations between Washington and Beijing, following a bitter tit-for-tat tariff war, analysts told Reuters.

US President Donald Trump would not accept any trade accord that is not perfect, but would still work on an agreement, State Secretary Mike Pompeo said.

While a raft of positive data from the US lent  support to the dollar, the Federal Reserve’s patient approach on interest rate hikes is nowhere close to running out.