Gold steady as Sino-US trade hopes drag dollar

Gold prices held firm on Wednesday as the dollar weakened on hopes of a trade deal between the United States and China, but an improved risk appetite limited gains.

FUNDAMENTALS
Spot gold was steady at $ 1,311 per ounce, as of 0115 GMT.

US gold futures were mostly unchanged at $ 1,314.20 per ounce.

US and Chinese officials expressed hopes that a new round of trade talks, which began in Beijing on Monday, would bring them closer to easing their nearly year-long trade war.

US President Donald Trump said on Tuesday that he could let the March 1 deadline for a trade agreement with China “slide for a little while,” but that he would prefer not to and expects to meet with Chinese President Xi Jinping.

Beijing and Washington are trying to hammer out a deal before the March 1 deadline, after which US tariffs on $ 200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.

In Washington, US lawmakers reached a tentative deal on border security funding, although aides cautioned that it did not contain the $ 5.7 billion President Donald Trump wants to build a wall on the Mexican border.

Trump expressed displeasure with the deal on border security spending that offered no funds for his promised US-Mexican border wall, but did not reject it outright and indicated he did not expect a shutdown.

For the near-term, gold is expected to stay above $ 1,300, which is seen as a critical support level in charts followed by technical traders, analysts said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.40 percent to 798.89 tonnes on Tuesday from Monday.

South Africa’s Sibanye-Stillwater said on Tuesday it was considering measures including restructuring if alternative solutions could not be found to bring loss-making gold shafts back to profitability.

Investors made a U-turn on emerging markets, naming them the most crowded trade, in Bank of America Merrill Lynch’s survey for the first time in its history.

The risk of a US recession is not currently elevated, Federal Reserve Chairman Jerome Powell said on Tuesday.