BENGALURU: Gold prices fell on Tuesday, as the dollar recovered from lows and hopes for a trade deal between China and the United States whetted risk appetite, making bullion less attractive.
Spot gold slipped 0.4 per cent to $1,283.43 per ounce as of 1040 GMT. US gold futures were 0.4 per cent lower at $1,284.50 (Dh4,718) per ounce.
The dollar index was 0.2 per cent higher against its peers, having dropped to its lowest since Oct. 22 the previous session.
“At the moment the dollar is recovering, which is one of the reasons gold prices are lower,” said ABN AMRO analyst Georgette Boele. “At the same time, markets are nervous ahead of discussions going on between US and China.” Stock markets were trading higher as investors anticipated that the Chinese-US trade spat was nearing a close and that the US. Federal Reserve would halt its monetary policy tightening if economic growth slows further.
As Washington and Beijing resumed talks, US. Commerce Secretary Wilbur Ross said on Monday the two biggest economies could reach a trade deal.
“Any kind of agreement should be bullish for gold because of a stronger Chinese renminbi,” said Commerzbank analyst Carsten Fritsch, adding that China was the largest consumer of gold.
“Gold is in positive environment. It had such a strong year-end, it is not surprising to see some profit taking,” he said.
Dollar-denominated gold has gained about 11 per cent since hitting a more than 1-1/2 year low in mid-August. Bullion prices hit their highest since June 2018 at $1,298.42 on Friday.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw some outflows on Friday.
But holdings are still at their highest since August 2018.
“ETF demand has been one of the primary drivers of the move higher for gold over the past month or so and is still continuing to increase,” MKS PAMP Group traders said in a note.
“This has been mainly apparent in US and UK based funds amid uncertainty on growth and Brexit risks,” they said.
In other precious metals, palladium fell 0.5 per cent to $1,293.20 per ounce, but was still near the record high of $1,313.24 hit the previous session. The metal was trading at a premium to gold.
Silver edged 0.3 per cent lower to $15.59 per ounce, while platinum fell 0.2 per cent to $821, having hit its highest in more than a month at $831.10 on Monday.