Gold falls to near two-month low as robust dollar weighs

Gold prices fell to a near two-month low on Tuesday, weighed down by a stronger dollar, while hopes of progress in the United States (US)-China trade talks lifted equity markets in a further hit to the bullion's appeal.

Trading was thin in Asian hours as traders in top consumer China went for a long public holiday.

Spot gold was down 0.4 per cent at $1,465.80 per ounce, as of 0456 GMT, after declining to its lowest since August 6 at $1,462.44 earlier in the session. US gold futures were 0.1 per cent lower at $1,471.80 per ounce.

The dollar's potential to gain further and some optimism around a potential trade deal between Washington and Beijing weighed on gold, said Michael McCarthy, chief market strategist at CMC Markets.

“We also broke through the $1,480-$1,490 support level and on a technical basis that in itself is enough to spur further selling,” he said.

The dollar index against a basket of six major currencies climbed to a more than two-year high, as investors waited for September US manufacturing data to determine how far policy-makers will go to bolster growth.

Asian shares ticked up as some investors clung to hopes that the fourth quarter will bring progress in resolving the US-China trade war that has cast a shadow over the global economy.

Meanwhile, White House trade adviser Peter Navarro dismissed reports that the Trump administration was considering de-listing Chinese companies from US stock exchanges as “fake news”.

China and the US are due to resume high-level trade talks next week in Washington. While the tussle over trade and technology between the world's two largest economies has intensified, some investors are sticking to hopes of a compromise.

“We're unlikely to see this rather complex and difficult situation resolve anytime this year. If both sides appear to accept a partial settlement that could be good news,” McCarthy said.

On the technical front, spot gold may break a support at $1,462 per ounce and fall towards $1,446, according to analysts.

Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22 per cent to 920.83 tonnes on Monday.

Among other precious metals, deficit-hit palladium was little changed at $1,675.29 per ounce, having scaled a record peak of $1,700.71 on Monday.

Platinum was down 0.1 per cent at $881.37 per ounce. Silver was 0.1 per cent lower at $16.97, after hitting its lowest since August 20 at $16.87 earlier in the session.

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