Gold edged up overnight as a slide in global share markets after the US government’s threat of further tariffs on China prompted investors to favour safe-haven assets, but bullion’s upside was capped by a firm US dollar.
Spot gold gained 0.2 per cent to $US1,281.76 per ounce.
US gold futures settled up 0.2 per cent at $US1,283.8 an ounce.
“We had two big geo-political events over the weekend, one is the news from Iran with US carrier, bombers group headed to Middle East and all the stuff with China about tariffs,” said Bob Haberkorn, senior market strategist at RJO Futures.
The two geo-political risk events should have helped gold trade higher but the US dollar strengthened on US President Donald Trump’s comments, which has kept gold prices in check, he added.
The US dollar firmed against most major currencies on Monday after Trump said he would raise tariffs on $US200 billion worth of Chinese goods this week.
Trump said he would target a further $US325 billion of Chinese goods with 25 per cent tariffs “shortly,” essentially covering all products imported into the United States from China.
Stocks around the world tumbled and oil prices slumped after Trump’s announcement, improving the appeal of bullion, seen as an alternative investment during times of political and financial uncertainties along with the Japanese yen and US Treasuries.
Also helping bullion was news, disclosed by Trump’s national security adviser John Bolton on Sunday, that the United States was deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran.
Reflecting investors sentiment toward gold, speculators switched to a net long position in COMEX gold in the week to April 30, the US Commodity Futures Trading Commission (CFTC) said on Friday.
“People are pretty complacent about the equity markets for the past few months. And the recent sell-off is making investors to rethink about their portfolio,” said Michael Matousek, head trader at US Global Investors.
“A lot of them see they have underweighted gold and are adding to their position a little bit.”
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold backed exchange, slipped to their lowest since October 11.
Holdings fell 0.6 per cent on Friday.
The US tariffs on China, the world’s biggest car market, also weighed on palladium prices.
The auto-catalyst metal slipped 2.7 per cent to $US1,334.01 per ounce.
Silver fell 0.2 per cent to $US14.90 per ounce, while platinum gained 0.4 per cent to $US872.