Gold edges higher after new US-China tariffs
Gold edged slightly higher on Monday after the United States and China imposed new tariffs on each others’ goods but a firmer dollar limited the precious metal’s upside.
Washington began imposing 15 percent tariffs on a variety of Chinese goods on Sunday, including footwear, smart watches and flat-panel televisions, as Beijing began imposing new duties on US crude.
However, US President Donald Trump said both sides would still meet for talks later this month.
Spot gold was up 0.2 percent at $1,522.17 per ounce as of 0920 GMT, having fallen to a one-week low at $1,517.11 in the previous session. US gold futures were up 0.1 percent at $1,531 an ounce.
Trading could be subdued as US financial markets are closed for the Labour Day holiday.
“Overall, there is nothing going on apart from the fact that the dollar is stronger. There was not so much reaction (in gold prices) as this (tariffs) was well anticipated,” ABN Amro analyst Georgette Boele said.
Against key rivals, the dollar scaled a more-than two-year high earlier in the session, making gold costlier for investors holding other currency.
“We can expect a correction in gold prices as it had moved up so quickly that you don’t need so much to trigger profit taking,” Boele added.
The trade war, heightened fears over a global economic downturn, negative yielding debt around the globe and hopes for interest rate cuts by global central banks contributed to a rise of more than $100 for gold in August.
Federal fund futures implied traders saw a 97 percent chance of a 25 basis-point rate cut by the US central bank this month. The European Central Bank was also widely expected to lower interest rates.
On the technical front, “near-term supportive interest sits around $1,515-$1,520, while resistance cuts in toward $1,535 with extension toward $1,550,” MKS PAMP said in a note.
“At current levels, both the CFTC (Commodity Futures Trading Commission) and ETF (exchange-traded fund) positions remain bullish and are likely to continue to be so over the near term should price action remain firm broadly around $1,500-$1,480.”
Holdings in the world’s largest gold-backed ETF, SPDR Gold Trust, have risen about 12 percent this year.
Speculators increased their bullish stance in COMEX gold and upped net long positions in silver contracts in the week to Aug. 27, US CFTC data showed on Friday.
Among other precious metals, silver dipped 0.2 percent to $18.31 per ounce. Platinum slipped 0.3 percent to $927.71 per ounce, while palladium was down 0.2 percent at $1,528.63.