Gold holds firm on trade, growth worries

BENGALURU: Gold held steady yesterday on worries that a prolonged Sino-US trade war could worsen global economic slowdown, but a strong US dollar put bullion on track for its first weekly loss in three.

Spot gold was steady at US$1,309 per ounce, as of 0700 GMT, after the metal hit its lowest since Jan 29 at US$1,302.11 on Thursday.

US gold futures were down 0.1% at US$1,312.70.

US President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal. The two countries had taken a 90-day hiatus in their trade war to work out a deal.

Stocks pulled back sharply around the world on fears of a global growth slowdown spreading to Europe and uncertainties around US-China trade tensions.

“Some of our growth indicators are clearly seeing easing global activity and trade volumes are being hit. That makes people cautious and could derive support for gold around US$1,300-US$1,330 range,” said John Sharma, an economist with National Australian Bank.

The European Commission on Thursday sharply cut its forecasts for eurozone economic growth this year and next on expectations the bloc’s largest countries will be held back by global trade tensions and domestic challenges.

“People are still not sure in what direction the trade war might go,” Sharma said, adding that the US dollar’s strength was also capping gold’s gains.

The dollar index, a gauge of its value versus six major peers, was hovering close to its two-week high.

Bullion prices have risen about 13% since touching over 1½-year lows in August, mostly due to volatile stock markets, a pull-back in dollar and dovish US Federal Reserve.

But, a strong dollar, which makes bullion more expensive for holders of other currencies, has driven gold down 0.6% for this week.