Gold prices on Wednesday hovered near a one-month high hit in the previous session, as comments from U.S. President Donald Trump dashed market hopes for a quick preliminary agreement with China, driving support for safe-haven assets.
Spot gold XAU= was up 0.1% at $1,478.81 per ounce, as of 0403 GMT, while U.S. gold futures were flat at $1,484.60.
Bullion prices rose to their highest since Nov. 7 on Tuesday after Trump said a deal with China might have to wait until after the U.S. presidential election in November 2020.
Gold, which is seen as safe investment during times of political and economic stress, has gained about 15% so far this year, mainly due to the 17-month trade dispute and its impact on global economy.
Trump’s comments come shortly after he slapped tariffs on U.S. steel and aluminium imports from Brazil and Argentina.
“Gold has benefited from strong safe-haven flows, equities tanked and the dollar fell as well. And, that’s the reason why gold has risen overnight,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.
“President Trump saying a trade deal may not happen until after the U.S. election next year and the passage of the second China bill in the House of Representatives will add to the extreme trade worries because the fear is - China might just walk away from any trade negotiations.” The U.S. House of Representatives approved a bill that would require Washington to toughen its response to Beijing’s crackdown on its Uighur Muslim minority, which investors fear can possibly deteriorate trade ties.
Dimming hopes of a trade deal further, U.S. Commerce Secretary Wilbur Ross rejected any deadlines on a trade deal with Beijing and launched a fresh attack on telecoms giant Huawei.
Trump’s statement on Tuesday prompted investors to reduce their exposure to risk, with Asian shares extending their losses, while the U.S. dollar slid to a one-month low, making gold more attractive.
Spot gold may rise to $1,492 per ounce, as it has cleared a resistance at $1,478, according to Reuters technical analyst Wang Tao.
In other precious metals, palladium XPD= dipped 0.2% to $1,851.94 per ounce, after scaling an all-time peak on Dec. 2 at $1,861.71.
Silver XAG= remained unchanged at $17.17, while platinum XPT= advanced 0.2% to $911.24 per ounce.