March 06, 2018
PRECIOUS-Gold prices gain on softer dollar due to trade war fears
(Reuters) - Gold prices edged up on Tuesday on a softerdollar and as investors covered short positions amid jitters about a globaltrade war due to U.S. President Donald Trump's plan to impose steel andaluminum tariffs.
Spot gold was trading up 0.2 percent at $1,322.55 per ounceat 0341 GMT, while U.S. gold futures for April delivery rose 0.3 percent to$1,323.30 per ounce.
The dollar index, which measures the greenback against abasket of major currencies, eased 0.2 percent. The dollar tumbled to 16-monthlows against the safe-haven yen late last week as concerns about a trade wargripped markets after Trump announced his plan for steel and aluminium tariffs.
"A lot of gold's movement of late has been driven byTrump's actions. Market watchers are closely watching what he is going to sayand do as no one knows what he is actually going to do," said OCBC analystBarnabas Gan.
"The threat of the steel and aluminum tariff materializingis still a possibility and that's why gold prices will be trading around theselevels."
Trump refused to back down from his decision to levytariffs on imported steel and aluminum tariffs despite a backlash from tradeallies.
"In the near term, given the unpredictable nature ofcurrent market sentiment, investors will continue to buy gold on dips to hedgethe growing tail risk from Trump's controversial policies," said StephenInnes, APAC trading head at OANDA.
Worries have eased this week, however, as pressure toback off from plans to implement new tariffs grew and as market participantscame to view Trump's proposed tariffs more as a negotiating tactic than a hardpolicy proposal.
Trump was expected to finalise the planned tariffs laterin the week, although some observers familiar with the process said it couldoccur next week.
Asian shares regained some ground on Tuesday as investor worriesabout an imminent trade war eased.
Spot gold may retest a support at $1,316 per ounce, as itmay have completed a bounce from the March 1 low of $1,302.61, according toReuters technical analyst Wang Tao.
In other precious metals, silver was flat at $16.43 perounce.
Platinum rose 0.3 percent to $963.50 per ounce, while palladiumgained 0.4 percent to $986.47 per ounce.