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Gold prices fell on Thursday, pulling back from one-week highs reached the session before, as risk appetite recovered after the United States expressed willingness to resolve an escalating trade fight with China.
Spot gold dipped 0.6 per cent to $1,324.96 per ounce by 0701 GMT, after touching a one-week high of $1,348.06 on Wednesday. US gold futures fell 0.9 per cent to $1,328.50 an ounce.
“Gold ... gave up its gains after (US President Donald Trump's economic adviser) Larry Kudlow calmed fears that the trade rhetoric will escalate,” said Jordan Eliseo, chief economist at gold trader ABC Bullion.
The United States had voiced willingness on Wednesday to discuss with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports.
As investors pulled out of gold, the dollar gained and Asian equities rebounded from two-month lows. Gold's drop shows traders were “liquidating profits and opportunists taking advantage of the market on a short-term basis,” said Joshua Rotbart, managing partner of J. Rotbart & Co in Hong Kong.
However, the threat to a global economic recovery from the US-China tariffs war, rising stock market volatility and growing inflation expectations could push gold prices higher, RBC Capital Markets said in a note.
SPDR Gold Trust
Gold is often used as a store of value during times of financial or political uncertainty. Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, were largely steady at 852.03 tonnes on Wednesday compared with 852.31 tonnes on Tuesday.
Markets in mainland China, the world’s largest gold consumer, are closed for the Tomb Sweeping Day holiday on Thursday and Friday.
Meanwhile, spot silver inched down 0.2 per cent to $16.24 per ounce. Platinum was off 0.5 per cent at $907.20 an ounce, after earlier hitting $901.50, its lowest since December. Palladium was steady at $924.55 an ounce after touching $913 on Wednesday, its weakest since early October.
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