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Gold prices rose on Wednesday on uncertainty about trade talks between the United States and China, which boosted the metal’s safe-haven appeal, but a firmer dollar kept a lid on gains.
The precious metal, which is often used as store of wealth in times of political or economic uncertainty, showed signs of strength after US. President Donald Trump said he was not pleased with recent talks with China.
Trump also said there was a “substantial chance” his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resistant to giving up his nuclear weapons.
But the dollar, in which gold and other commodities are priced, rose versus a basket of currencies, with investors awaiting minutes of the Federal Reserve’s latest policy meeting due later in the day.
“Normally in such a stronger dollar environment gold is trading lower but it’s not and this is indicating there is probably safe-haven flows supporting gold,” said Quantitative Commodity Research consultant Peter Fertig. Spot gold was 0.4 per cent higher at $1,296.42 per ounce as of 1050 GMT, while US gold futures for June delivery rose 0.3 per cent at $1,296 per ounce. Prices remained stuck in a narrow range as investors awaited more clues on the path of US interest rates.
At its previous meeting in May, the US central bank expressed confidence in the economy and kept its benchmark lending rate unchanged. It said inflation was near the bank’s target, leaving the bank on track to raise borrowing costs in June.
Gold is highly sensitive to rising US rates, as these tend to boost the dollar in which the metal is priced. Gold has shown reduced volatility in the last few trading sessions as it attempted a break above $1,300 and prices are “waiting for a new, clear direction,” said ActivTrades chief analyst Carlo Alberto De Casa.
Holdings of the world’s largest gold-backed exchange-traded fund (ETF), New York-based SPDR Gold Shares, fell 0.38 per cent to 852.04 tonnes on Monday from 855.28 tonnes on Friday.
“We think gold will be in for a period of consolidation in the short term and are monitoring moves in ETF holdings — which have surprisingly held rather steadily given the move through $1,300 support,” said MKS senior precious metals dealer Alex Thorndike.
In other precious metals, silver inched up 0.1 per cent to $16.54 an ounce and platinum was 0.6 per cent higher at $908.20 an ounce. Palladium eased 0.5 per cent to $986 an ounce.
Gold is sticking to a narrow trading range around $1,200 (Dh4,406) an ounce even after holdings in bullion-backed exchange-traded funds plunged to their lowest in a year.
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