Gold firmed overnight, supported by uncertainty over the future pace of US interest rate hikes and the outcome of the G20 summit later this week when global leaders will focus on trade tensions.
Spot gold was steady at $US1,222.42 per ounce.
US gold futures settled down mostly unchanged at $US1,222.40 per ounce.
US President Donald Trump and his Chinese counterpart Xi Jinping are expected to discuss their trade dispute at the G20 summit in Argentina, which begins on Friday.
‘If Trump and Xi can’t come to an agreement at the G20 meeting, I think you will see a pause in the US Federal Reserve’s rate increases next year … which in turn will help gold prices go higher,’ said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
Uncertainties related to Brexit and Italy are also helping build a base for gold, which was helped by a slight retreat in the dollar earlier in the session, he added.
The euro gained against the dollar on signs Italy may cut its budget deficit target to satisfy the European Union, while the sterling rose after the EU and Britain sealed a Brexit deal.
Analysts remain cautious, however, as the Brexit deal faces stiff opposition in the British parliament.
Gold’s direction in the near term would be determined by moves in the greenback, which could be pressured if the Fed takes a more cautious approach to future policy tightening amid concern of an economic slowdown next year, analysts said.
‘The metal could be in for a sizeable drop should support at $US1,220 break, in which case a return back down to the next support at $US1,205 would become likely,’ said Fawad Razaqzada, an analyst with Forex.com.
‘With the 10-year US bond yields on the rise again, this may support the greenback and simultaneously prevent gold from going higher.’
Gold prices have lost about 10 per cent from their April peak and are down six per cent so far this year.
‘Given that (speculative) positioning is at its lowest level since 2002, we find it difficult to see gold going any lower and expect it to rebound as soon as strong dollar trend begins to fade,’ Goldman Sachs analysts said in a note.
Speculators increased their net short positions in Comex gold and silver contracts in the week to November 13.
‘If US growth slows down next year, as expected, gold would benefit from higher demand for defensive assets,’ Goldman said.
Among other precious metals, silver rose 0.1 per cent to $US14.25 an ounce and platinum was up 0.8 per cent at $US845.50.
Palladium climbed 2.2 per cent to $US1,143.49 an ounce.
Prices fell about three per cent in the previous session, their biggest one-day percentage decline since August 15.