June 11, 2019
Gold draws support from U.S. and China trade worries following sharp sell off
(Reuters) - Gold held steady on Tuesday after posting its biggest one-day percentage fall in two months in the previous session, as Washington's fresh trade threats against China eclipsed investor optimism spurred by a U.S.-Mexico deal.
Spot gold was up 0.1% at $1,328.78 per ounce as of 0356 GMT, while U.S. gold futures rose 0.2% to $1,332.30 an ounce.
Bullion lost more than 1% in the previous session to an intra-day low of $1,324.50 after markets took heart from a deal between the United States and Mexico to avert yet another tariff war late last week.
"Easing (U.S.-Mexico) trade tensions weighed on the gold market yesterday, but it hasn't erased concerns around the U.S.-China talks", ANZ analyst Daniel Hynes said.
The (U.S.-China concerns) "resulted in yesterday's sell-off being short-lived and we are seeing some residual safe-haven buying keeping prices well supported," he said.
U.S. President Donald Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with China's President at a Group of 20 summit later this month.
Trump has repeatedly said he expected to meet Xi at the June 28-29 summit in Osaka, Japan, although China has yet to officially confirm any such meeting.
China's foreign ministry said on Monday that China is open to more trade talks with Washington but has nothing to announce about a possible meeting.
U.S. President also warned that if a portion of the U.S.-Mexico deal, which requires ratification by Mexican lawmakers, was not approved, "tariffs will be reinstated".
The dollar was largely steady against other major currencies on Tuesday, but investor appetite for risk was kept in check after Trump renewed his tariff threats towards China.
The U.S currency, however, has lost more than 1.5% since scaling over a two-year peak of 98.371 on May 23 on expectations of an interest rate cut by U.S. Federal Reserve.
"We remain cautiously constructive on gold despite Monday's decline as we have to suspect that the trend of a lower dollar and depressed global interest rates will continue to stay in place for some time, providing gold prices with some ballast," INTL FCStone analyst Edward Meir said in a note.
Among other precious metals, silver gained 0.3% to $14.70 per ounce, and platinum rose 0.5% to $806.33 per ounce.
Palladium edged 0.1% higher to $1,382.70 per ounce after hitting a more than one-month high of $1,393.53 in the previous session.