Gold prices rose on Monday as the US dollar turned lower, but caution over the prospect of a potential escalation in the China-US trade dispute, upcoming US data and US Federal Reserve meeting minutes kept prices in a range.
Spot gold gained 0.3 per cent at $US1,336.80 per ounce, while US gold futures for June delivery settled up $US4, or 0.3 per cent, at $US1,340.10 per ounce.
The US dollar index slipped against a basket of currencies and global equities rose as the US government played down fears of a trade war with China, though traders remained cautious.
The two countries have threatened each other with tens of billions of dollars of tariffs, but officials in US President Donald Trump’s administration have stressed the tariffs are not yet in place and the dispute could be resolved through talks.
Chinese President Xi Jinping is due to deliver a speech on Tuesday at the Boao Forum for Asia in Hainan province.
‘If [the speech] shows that the trade war tensions are not de-escalated, we could see a big upside move for the gold price,’ Think Markets’ chief market analyst Naeem Aslam said.
‘If we look at the price action for gold, we are consolidating,’ he added. ‘Support is at $US1,307 and resistance is at $US1,348. We need to break out of this zone, and that would set the tone for the new trend.’
Markets are also looking ahead this week to minutes from the latest Federal Open Markets committee meeting and CPI data, anticipation keeping gold hemmed in a tight range, said Michael Matousek, head trader at US Global Investors.
‘Traders are not making any big today moves until they get more confirmation on the direction of rates or inflation,’ Matousek said.
Higher interest rates tend to make gold less attractive since it does not bear interest.
Silver gained 1.3 per cent at $US16.53 an ounce, while platinum increased 2.4 per cent at $US934.50 an ounce.