Mubasher: Gold prices rose on Tuesday following a sharp fall in the preceding session, as worries mounted over an economic downturn amid soft global manufacturing figures, and US-European trade disputes, Reuters reported.
By 10:50 am GMT, spot gold climbed by 0.60% to $1,392.52 per ounce, having seen its steepest one-day percentage drop since November 2016, while US gold futures rose by 0.43% to $1,395.30 per ounce.
Manufacturing activity contracted in most of the European and Asian economies last June, while factories in the US saw slower growth, all of which kept the world’s monetary policymakers under the pressure to avoid a recession.
“Weak data gave investors a reminder of the recession risk ahead of us and that is part of the driver for safe haven,” CMC Markets analyst Margaret Yang Yan was quoted by Reuters.
In addition, the trade conflict was brought to the forefront again, as the US ratcheted up the pressure on the European Union (EU) over a nearly 15-year dispute over aircraft subsidies.
Washington on Monday threatened to add another $4 billion worth of EU goods to a $21 billion list of imports that was announced last April.
That said, the yellow metal’s gains were limited by a strong US dollar, which hovered close to its highest level in more than a week, supported by an agreement between the US and China to restart talks to resolve their trade conflict.
At 10:52 am GMT, the dollar index, which gauges the greenback against a basket of six major rivals, inched down by 0.09% to 96.76.
In the meantime, market participants are awaiting the US non-farm payroll figures due to be released this Friday.
“The non-farm payrolls data will be the signpost for a 25 or 50 basis point cut by the central bank [...] but even a 25 basis point cut is supportive in the medium-term for gold,” Vanguard Markets managing partner Stephen Innes was quoted by the news agency.
Lower interest rates tend to be supportive for the gold as the opportunity cost of holding the non-yielding metal became lesser, while they drag the dollar, making the bullion cheaper for non-US currency holders.
