Gold rises as dollar, stocks ease ahead of US-China talks
Oct 8: Gold firmed on Tuesday after touching a near one-week low, as the dollar eased and European stocks moved lower ahead of minutes from the US Federal Reserve and scheduled trade talks between Washington and Beijing.
Spot gold rose 0.5per cent to $1,500.35 per ounce, as of 0931 GMT. Prices had dropped as much as 1per cent in the previous session.
US gold futures were up 0.1per cent at $1,505.90 per ounce.
"Gold seems to be relatively stable at the moment and that has a lot to do with the fact we are in a fragile risk environment," said OANDA senior market analyst Craig Erlam.
European shares turned gave up early gains as prospects for progress in US-China trade talks looked less likely after Washington blacklisted Chinese companies over Beijing's treatment of predominantly Muslim ethnic minorities.
"If we do see a full collapse (in trade talks) unexpectedly, that will lead to a lot of risk aversion which could be the bullish catalyst gold needs," Erlam said, adding that there was a lot of uncertainty over the Fed minutes as well.
Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer are set to resume top-level trade talks on Thursday, ahead of a scheduled increase in US tariffs on $250 billion worth of Chinese goods on Oct. 15.
Market participants are also awaiting the US Federal Open Market Committee's minutes from its September meeting on Wednesday for clues on whether the Fed will cut rates at its October meeting in what could be its third interest rate cut for the year.
Lower interest rates tend to increase investor interest in non-yielding gold.
Gold also drew support from the dollar, with the dollar index shedding overnight gains against rivals. A weaker US currency makes dollar-denominated gold less expensive for holders of other currencies.
"Gold ETFs (exchange-traded fund) are close to the highest in years, so there definitely is demand for gold because of trade tensions and the slowdown in general in global growth rates," said SP Angel analyst Sergey Raevskiy.
Holdings of the world's largest gold-backed ETF, SPDR Gold Shares, held close to their highest in nearly three years at about 923.76 tonnes.
However, "gold is going to be rangebound until there is any understanding of how the (US-China trade) meeting went," Raevskiy added.
Among other precious metals, silver gained 0.4per cent to $17.51 an ounce, while platinum rose 0.4per cent at $880.16 and palladium fell 0.7per cent at $1,647.86. -Reuters