Gold prices flat as simmering Sino-US trade tensions support dollar amid Fed Reserve meet delays rate cut plan

Gold prices were steady on Thursday, as simmering Sino-US trade tensions underpinned the dollar, while bullion investors looked for a direction after the minutes of the US Federal Reserve meeting indicated that there was no hurry in cutting rates.

Spot gold was steady at $1,273.37 per ounce, after falling to $1,268.97 on Tuesday — its lowest level since 3 May.

US gold futures edged down 0.1 percent to $1,272.80.

“The short-term effect of the US-China trade conflict is driving the US dollar index higher in general and that doesn’t help gold,” Nicholas Frappell, global general manager at ABC Bullion, said.

“Also, during mid-May, plenty of fresh buying went into long positions at higher levels, and since then open interest on the CME has declined, which implies that some of those longs got out and are on the defensive.”

The US administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country’s treatment of its Uighur Muslim minority, a person briefed on the matter said on Wednesday.

The dollar index against a basket of six major currencies edged up 0.1 percent to hover near its one-month high touched early in the week.

Asian shares were in the red on Thursday amid concerns over US-China trade.

Meanwhile, minutes from the US Federal Reserve’s latest meeting showed that officials agreed their current patient approach to setting monetary policy could remain in place “for some time,” further sign policymakers see little need to change rates in either direction.

“Commentary reiterating officials’ wait-and-see approach amid a raft of global uncertainties may cool rate cut hopes,” Ilya Spivak, senior currency strategist with DailyFx, said.

“That seems inherently US dollar-supportive, with haven demand (for dollar) acting as a further accelerant as markets pining for policy support tilt into risk-off territory.”

Lacklustre investor interest in bullion was reflected in the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. Holdings have declined nearly 7 percent so far this year.

SPDR holdings edged 0.1 percent lower to 738.81 tonnes on Wednesday.

Among other precious metals, silver fell 0.4 percent to $14.43 per ounce, while palladium edged 0.2 percent lower to $1,312.45.

Platinum was steady at $799.02 an ounce, after touching its lowest level since 15 February at $792.50 earlier in the session.