Gold steadies as dollar extends rally; U.S.-China ties in focus

Gold prices were little changed on Monday, having retreated sharply from a record peak in the last session, as the dollar made further gains with investors keeping a cautious eye on the U.S.-China spat ahead of key trade talks on Aug. 15.

Spot gold was steady at $2,033.61 per ounce by 0925 GMT. U.S. gold futures rose 0.76 pc to $2,043.50.

Gold hit a record high of $2,072.50 on Friday but pulled back as much as 2pc, hurt by a bounce in the dollar after data showed the U.S. economy added 1.763 million jobs in July.

"We're seeing a little bit of a top (in gold) in the short to medium term and because of the rebound of the dollar, we could see a little bit of a drift lower over the course of the next few days" said Michael Hewson, chief market analyst at CMC Markets UK.

While gold could decline further towards $2,000 or lower as investors book profits, bullion hasn't lost its lustre, he added.

The dollar has, on occasion, been the favoured refuge amid escalations between Washington and Beijing, and was up in early London trading, with investors also focusing on fiscal stimulus in the U.S. ahead of key trade talks on Aug. 15.

Last week, U.S. President Donald Trump took steps to ban two popular Chinese apps, prompting a warning from China that Washington would have to "bear the consequences".

Unprecedented global stimulus due to the COVID-19 pandemic and resultant expectations of currency debasement and inflation have buoyed gold's appeal as an insurance, driving it 34pc higher so far this year.

"As long as the price remains above $2,000, the bullish momentum can continue, as the hunger for gold is still at its peak," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Silver rose 0.1pc to $28.32 per ounce, platinum gained 1.2pc to $973.01 per ounce and palladium was also up by 0.3pc at $2,182.70 per ounce.