Gold prices rise as dollar slips to lowest in nearly 3 weeks

BENGALURU: Gold prices nudged higher on Tuesday as the US dollar slid to its weakest level in about three-weeks, with the metal also supported by festering worries over US-China trade tensions.

Spot gold had gained 0.2 per cent to $ 1,347.81 an ounce by 0707 GMT, while US gold futures were steady at $ 1,350.60 an ounce.

“Despite a quietening of negative headlines overnight, its unlikely we’ve seen the last of China trade tensions or a weaker US dollar for that fact. All of which continues to provide the most apparent reasons to own gold,” said Stephen Innes, head of trading for Asia-Pacific for OANDA in Singapore.

The dollar index , which measures the greenback against a basket of currencies, eased to a low of 89.270 earlier in the session, its weakest since March 28.

Against the yen, the dollar was down 0.2 per cent at 106.93, off its seven-week high of 107.78 yen touched on Friday as traders braced for a meeting between US President Donald Trump and Japanese Prime Minister Shinzo Abe starting on Tuesday.

Meanwhile, the likelihood that there would be no immediate military escalation in Syria following the weekend missile strikes by the United States, Britain and France, improved investor appetite for risk and limited gold’s gains.

“In my view geopolitical events tend to have short-lived impact on gold prices unless they have far reaching economic consequences. So in this sense, the Russian/Chinese sanctions are far more important to the world economy and to gold as opposed to one-off strikes in Syria,” said INTL FCStone analyst Edward Meir.

Gold is often seen as an alternative investment at times of political and financial uncertainty.

The US yield curve reached it flattest level in over a decade on Monday after the White House said President Trump would nominate Richard Clarida as Federal Reserve Vice Chairman, adding another hawkish voice at the central bank.

On Monday, Trump also accused Russia and China of devaluing their currencies while the United States raises interest rates.

Higher rates tend to boost the dollar, making greenback-denominated gold more expensive for buyers using other currencies.

In other precious metals, silver rose 0.7 per cent to $ 16.72 per ounce and platinum was 0.5-per cent higher at $ 928.99.

Palladium advanced 0.5 per cent to $ 1,006 an ounce, after rising to $ 1,012.10 in the previous session, its strongest since March 1.