Gold prices held range-bound in Asian trade on Friday as the dollar trod water after US President Donald Trump sent mixed signals about the prospects for a trade deal with Beijing, while palladium notched a record high. Donald Trump and Chinese leader Xi Jinping are expected to discuss trade on the sidelines of the G20 summit in Argentina on Saturday, where global trade tensions are expected to dominate the agenda.
However, Trump sent mixed signals on Thursday about the trade deal, saying an agreement was close but he was not sure he wanted one, just as he left for Argentina for a meeting with President Xi. "The gold market shall be closely looking ahead to further cues from the G20 summit this weekend," said Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Broking Ltd.
"Any positive development will be negative for the dollar index, which has benefited as a safe haven this year whenever tensions were seen escalating. On the contrary, if the trade spat intensifies, the stage will be set for further decline in gold prices." Spot gold was up 0.1 percent to $1,224.21 per ounce at 0646 GMT. US gold futures inched lower at $1,229.7 an ounce.
"Gold seems to be moving sideward at this point of time... A lot depends on how the dollar will move," said Brian Lan, managing director at Singapore dealer GoldSilver Central. Gold prices have lost about 10 percent from their April peak as investors turned to the dollar as a safe haven with the trade war unfolding against a backdrop of higher US interest rates.
Higher interest rates raise the opportunity costs of holding gold, which earns nothing and costs money to store and insure. "Gold has held its 100-day moving average at around $1,211 and $1,215 to the 50-day moving average, so we definitely are moving into supports at the $1,215-$1,230 area," a Hong Kong-based trader said.
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