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Last Updated : Oct 08, 2019 03:34 PM IST | Source: Reuters

Gold dips as dollar holds strong ahead of Sino-US trade talks

The talks are to proceed ahead of a scheduled increase in US tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent on October 15.

5 | Russia - 2207.01 (Image source: )
5 | Russia - 2207.01 (Image source: )

Gold prices slipped to a near one-week low on Tuesday, declining for a third straight session, weighed down by a firmer dollar ahead of the upcoming trade talks between China and the United States.

Spot gold was down 0.3 percent at $1,489.32 per ounce, as of 0627 GMT. Prices had dropped 1 percent in the previous session.

US gold futures fell 0.6 percent to $1,494.60 per ounce.

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"One of the key factors to the gold market is the outlook for global growth, and with trade developments between US and China, traders are on alert," said Michael McCarthy, chief market strategist at CMC Markets.

Top-level trade talks are scheduled to resume on Thursday, when Chinese Vice Premier Liu He meets with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

"The market is very vulnerable to headlines. Any further news on discussions in the US with negotiators in China could be very important," McCarthy said.

Asian shares inched up in early trade, though caution prevailed as expectations of a trade deal dimmed after Washington blacklisted Chinese companies over Beijing's treatment of predominantly Muslim ethnic minorities and President Donald Trump said a quick trade deal was unlikely.

The uncertainty regarding the outcome of trade talks had pushed the dollar index higher overnight. A stronger US currency makes dollar-denominated gold more expensive for holders of other currencies, which could subdue demand.

The talks are to proceed ahead of a scheduled increase in US tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent on October 15.

Trump has said the tariff increase will take effect if no progress is made in the negotiations. Data from China on Tuesday did little to cheer markets after the services sector grew at its slowest pace in seven months in September, despite a strong increase in new orders.

"For the moment we are fairly in a trading range. There is support between $1,480 and $1,490, and resistance around $1,525 to $1,530," McCarthy added.

Investors now await the US Federal Open Market Committee's minutes from its September meeting, due 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.

Spot gold may break a support at $1,488 per ounce and fall towards the range of $1,446-$1,462, Reuters technical analyst Wang Tao said.

Among other precious metals, silver dropped 0.6 percent to $17.34 an ounce, while platinum and palladium rose 0.4 percent each to $880.25 and $1,665.93 respectively.

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First Published on Oct 8, 2019 11:32 am
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