(Reuters) – Gold prices moved in a narrow range on Friday as investors were cautious ahead of a G20 summit next week where leaders of the United States and China are set to discuss their trade dispute.
There will be a strong focus on the upcoming G20 summit to gauge the level of trade tensions between the United States and China. Any ratcheting up would favour gold,” said John Sharma, an economist with National Australia Bank (NAB).
The United States is set to raise its tariffs to 25 percent on $200 billion of Chinese imports on Jan. 1 from 10 percent currently. Trump has also threatened to impose tariffs on all Chinese imports unless U.S. demands are addressed.
Gold is often used by investors as an insurance against political and financial uncertainty.
“Investors are stepping in to hedge some of the possible tail risk from the G20 meeting next week,” said Stephen Innes, APAC trading head at OANDA in Singapore, adding the weaker dollar and U.S. Federal Reserve’s rate outlook are also supporting gold prices.
The dollar index is drifting lower after reaching a 16-month high hit earlier this month as a potential global economic slowdown raised doubts about the pace of interest rate hikes by the U.S. Federal Reserve next year.
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