Gold prices eased from a one-week high, but still remained up on Wednesday, as the US dollar dipped versus the yen and share markets faltered after China retaliated against a US move to slap tariffs on $US50 billion worth of its imports.
Beijing said after Chinese markets had closed that it would impose additional tariffs on $US50 billion worth of US imports ranging from cars, chemicals and corn to whisky and tobacco, initially raising trade-war jitters.
Spot gold was up 0.2 per cent at $US1,335.66 per ounce, while US gold futures futures for June delivery settled up $US2.90, or 0.2 per cent, at $US1,340.20.
Retaliation from China, the world’s largest gold consumer, earlier propelled spot gold prices to a one-week high at $US1,348.06 per ounce as the US dollar tumbled against the yen and equities dipped.
A lower appetite for risky investments took some strength from the dollar, which made dollar-priced gold cheaper for holders of non-US currencies. It also tends to make gold more appealing as a safe-haven asset during times of economic or geopolitical uncertainty.
But as Wall Street and European stocks pulled back from declines of more than one per cent and the dollar pared losses, gold shed some of its gains.
‘Gold worked for the hedgers today, as expected. When stocks were off over 500 points, gold was up over $US1,350. As stocks pared losses, (gold) gave back gains,’ said George Gero, managing director of RBC Wealth Management.
Also capping gold’s upside were signs of still-steady global economic growth.
‘Political (trade war) factors are offsetting the negative factors (for gold) of a generally improving US and global economy. We think gold is heading upwards largely because we have a weaker dollar view, but we think the range is going to hold for a while,’ said Matthew Turner, commodities strategist at Macquarie.
Investors are looking ahead to US nonfarm payrolls on Friday, with stronger-than-expected data a risk for gold as it will likely support the dollar and calm fears over growth, even in the face of a potential trade war, analysts said.
Meanwhile, spot silver fell 0.6 per cent to $US16.27 per ounce, after dipping to a six-day low of $US16.23.