Gold prices inched higher on Monday as hopes of easing trade tensions between the United States and China put pressure on the dollar, adding to demand for the yellow metal that improved last week after the prices touched 19-month lows.

Spot gold rose 0.1 per cent to $1,185.31 an ounce at 0245 GMT. Last week, it had touched its lowest since January 2017 at $1,159.96. The metal fell 2.2 per cent last week, marking the sixth consecutive weekly decline. It was also the worst weekly performance since December. US gold futures were up 0.7 per cent at $1,191.60 an ounce.

“Though the overall trend remains slightly weak for gold as there are no key fundamental cues favouring upside at the moment, value-buying in this oversold territory is highly likely to underpin prices,” said Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Securities Ltd.

Spot gold's 14-day relative strength index was at 31.977, after touching a low of 21.187 last week. A reading below 30 indicates a commodity is oversold and could herald a price correction. Gold has tumbled over 13 per cent from its April high as a rally in the greenback made dollar-priced bullion more expensive for buyers using other currencies.

Safe-haven

Investors seeking a safe place to store assets amid trade disputes and a Turkish currency crisis have preferred the dollar to gold, undermining the reputation of bullion as a safe-haven. But the dollar's advance slowed ahead of lower-level trade talks between Chinese and US officials in Washington scheduled for Tuesday and Wednesday.

The dollar index, which measures the greenback against a basket of six currencies, was at 96.175 on Monday, after hitting its highest since June 2017 last week. The index suffered its worst one-day decline in nearly a month on Friday.

SPDR Gold Trust

Meanwhile, hedge funds and money managers increased their net short position in COMEX gold contracts for the sixth straight week to another record in the week to August 14, data showed on Friday. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), fell 0.15 per cent to 772.24 tonnes on Friday from Thursday.

Some analysts and investors view the record levels of short positions and liquidations in ETFs as an indication that gold is due for a turnaround as it is oversold. Physical gold demand in second largest consumer India had regained momentum last week, with lower prices attracting fresh buying and driving premiums higher in other major Asian hubs as well.

Spot silver climbed 0.2 per cent to $14.78 an ounce. Platinum rose 1 per cent to $789.70, while palladium remained steady at $910.75.

Related Topics
comment COMMENT NOW