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Gold prices inched lower on Tuesday after gaining more than 1 per cent in the previous session, even as a sell-off in global equities amid concerns over a trade war between China and the United States continued to support the safe-haven metal.
Spot gold was down 0.1 per cent at $1,339.60 per ounce, as of 0712 GMT. It had climbed 1.3 per cent on Monday in its biggest one-day percentage gain in a week. US gold futures eased 0.3 per cent to $1,343.60 an ounce.
Gold is down most likely due to Chinese investors getting out of their positions ahead of holidays on Thursday and Friday, said MKS trader Sam Laughlin.
Qingming festival
The three-day Qingming tomb-sweeping festival in China starts on April 5. The risk-averse sentiment in the market, however, underpinned bullion, often seen as an alternative investment during times of political and financial uncertainty.
“Gold prices at this moment serve for investors risk aversion demand and gold for the immediate short-term will be well supported because of the volatility in the equity markets,” said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
“The previous $1,300 to $1,350 trading range for gold price could gradually move up to $1,330 to $1,380 because of the risk aversion.”
The dollar index , which measures the greenback against six other major currencies, was down 0.2 per cent at 89.893.
Asian shares slipped on Tuesday and the yen rose amid escalating trade tensions and concerns about tech firms.
“Trade war risk isn’t about to leave anytime soon as China escalation appears to have more bite than bark as there’s growing fear this could escalate,” said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
“As the market continues to go through the exercise of what if, the fear of the unknown will continue to support Gold prices.”
US tariffs on Chinese tech imports
The Trump administration this week will unveil a list of advanced technology Chinese imports targeted for US tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world's two largest economies.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.73 per cent to 852.31 tonnes on Monday from 846.12 tonnes on Thursday.
Among other precious metals, spot silver slid 0.4 per cent to $16.55 an ounce, having risen 1.8 per cent in the previous session. Platinum climbed 0.6 per cent to $934.60 an ounce.
Palladium was on track for an eighth straight session of declines, down 0.2 per cent at $932.97 per ounce. Earlier in the session, the metal hit $927.75, its lowest since October 10.
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