Gold prices were steady on Thursday, as simmering Sino-U.S. trade tensions underpinned the dollar, while bullion investors looked for a direction after the minutes of the U.S. Federal Reserve meeting indicated that rates will remain steady.
Spot gold was steady at $1,273.15 per ounce as of 0517 GMT, after falling to $1,268.97 on Tuesday - its lowest level since May 3.
U.S. gold futures edged down 0.1% to $1,272.60.
"The short-term effect of the U.S.-China trade conflict is driving the U.S. dollar index higher in general and that doesn't help gold," Nicholas Frappell, global general manager at ABC Bullion, said.
"Also, during mid-May, plenty of fresh buying went into long positions at higher levels, and since then open interest on the CME has declined, which implies that some of those longs got out and are on the defensive."
The U.S. administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country's treatment of its Uighur Muslim minority, a person briefed on the matter said on Wednesday.
The dollar index against a basket of six major currencies edged up 0.1% to hover near its one-month high touched early in the week.
Asian shares were in the red on Thursday amid concerns over U.S.-China trade.
Meanwhile, minutes from the U.S. Federal Reserve's latest meeting showed that officials agreed their current patient approach to setting monetary policy could remain in place "for some time," a further sign policymakers see little need to change rates in either direction.
"Commentary reiterating officials' wait-and-see approach amid a raft of global uncertainties may cool rate cut hopes," Ilya Spivak, senior currency strategist with DailyFx, said.
"That seems inherently U.S. dollar-supportive, with haven demand (for dollar) acting as a further accelerant as markets pining for policy support tilt into risk-off territory."
Lackluster investor interest in bullion was reflected in the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. Holdings have declined nearly 7% so far this year.
SPDR holdings edged 0.1% lower to 738.81 tonnes on Wednesday.
Spot gold is expected to test a support at $1,264 per ounce, a break below which could open the way towards $1,244, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver fell 0.1% to $14.42 per ounce, while palladium edged 0.5% lower to $1,308.
Platinum was steady at $799.02 an ounce, after touching its lowest level since Feb. 15 at $792 earlier in the session.
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