Gold Souk
Gold prices rose to a near one-month high on Wednesday Image Credit: GN

London: Gold prices rose to a near one-month high on Wednesday, as US President Donald Trump’s comments dampened hopes for a quick preliminary trade agreement with China, driving support for safe-haven assets.

Spot gold gained 0.3 per cent to $1,482.02 per ounce by 0707 GMT, its highest since November 7, while US gold futures were up 0.2 per cent to $1,487.90.

President Trump on Tuesday said a deal with China might have to wait until after the US presidential election in November 2020.

Trump’s comments come shortly after he slapped tariffs on US steel and aluminium imports from Brazil and Argentina.

“Gold has benefited from strong safe-haven flows, equities tanked and the dollar fell as well. And, that’s the reason why gold has risen overnight,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“President Trump saying a trade deal may not happen until after the US election next year and the passage of the second China bill in the House of Representatives will add to the extreme trade worries because the fear is — China might just walk away from any trade negotiations.”

The US House of Representatives approved a bill that would require Washington to toughen its response to China’s crackdown on its Uighur Muslim minority, which investors fear can possibly deteriorate trade ties.

Dimming hopes of a deal further, US Commerce Secretary Wilbur Ross rejected any deadlines on a trade deal with Beijing and launched a fresh attack on telecoms giant Huawei.

Trump’s remarks prompted investors to reduce their exposure to risk, with Asian shares extending their losses, while the US dollar hovered close to a one-month low, making gold more attractive.

Gold, which is seen as safe investment during times of political and economic stress, has gained about 15 per cent so far this year, mainly due to the 17-month long trade dispute and its impact on the global economy.

“Bull-run in gold is expected to continue and it can touch the $1,500 level this week, and $1,520 in the week going forward,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India.

Among other precious metals, palladium was flat at $1,855.39 per ounce, after scaling to an all-time peak of $1,861.71 on Dec. 2.

“Platinum and palladium are rallying because they have an industrial use and there’s just a massive squeeze on the supplies,” OANDA’s Halley said.

Platinum advanced 0.3 per cent to $912.46 per ounce and silver rose 0.4 per cent to $17.22.