Gold prices were little changed on Wednesday after falling in the previous session as concerns about a potential trade war between US and China eased which supported the dollar and reduced the incentive to hold bullion as a safe-haven asset.
Spot gold was down 0.1% at $1,343.98 per ounce at 9.49am. Prices dropped 0.7% on Tuesday, its biggest percentage loss since March 15, after rising during the previous two sessions. US gold futures for April delivery rose 0.1% to $1,343.40 per ounce.
“The gold price is mainly driven by the US dollar,” said Ji Ming, chief analyst, Shandong Gold Group. “The risk of trade war is shrinking, which is good for the US dollar, so maybe by end of this week the US dollar will not be that weak.”
The dollar index, which measures the greenback against six other major currencies, was down 0.1% at 89.267 after gaining 0.3% on Tuesday, the most since March 20.
The dollar recovered from the five-week low as concerns of a global trade war were eased by optimistic news that the U.S. and China were set to begin trade negotiations, after earlier exchanging threats.
Gold, which is sought as a store of value in times of political and financial uncertainty, becomes less expensive when the greenback weakens.
Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.14% to 846.12 tonnes on Tuesday from 847.30 tonnes on Monday.
In other precious metals, spot silver was up 0.2% at $16.51 per ounce after hitting a three-week high of $16.80 in the previous session. Platinum was up 0.1% at $943.50 per ounce, having fallen to lowest since early January in the previous session. Palladium was down 0.1% at $971.43 an ounce. livemint