Gold slips as U.S.-China trade row supports dollar

* SPDR Gold holdings fell for fifth session last week

* Platinum at three-week low

* U.S. dollar at near six-week high

By K. Sathya Narayanan

(Reuters) – Gold fell on Monday as investors looked to the safety of the dollar to stave off risks from the U.S.- China trade spat, as concerns mounted over a slowdown in global growth.

Spot gold fell 0.6 percent to $1,306.51 per ounce by 1053 GMT, after having risen for the previous two sessions.

U.S. gold futures declined 0.6 percent to $1,310.60 per ounce.

“The dollar seems to be the main beneficiary of the fears of economic slowdown, pushing gold down,” said Mitsubishi analyst Jonathan Butler.

“But gold has managed to be above $1,300 level, which is a fairly solid and decent support level since there are some downward pressures right now.”

The dollar index was at a near six-week high, making the greenback-denominated gold more expensive for holders of other currencies.

The dollar has risen despite the Federal Reserve pausing its multi-year rate hike cycle and dovish comments from several Fed officials, which pushed gold to a nine-month high at $1,326.30 in late January.

While gold is supported by the Fed’s policy, prices will likely remain range-bound until there is clarity on the trade front and U.S. government shutdown, OANDA analyst Edward Moya said in a note.

Investors’ focus will be back on the trade talks between Beijing and Washington this week as a delegation of U.S. officials travels to China for the next round of negotiations.

U.S. President Donald Trump said last week that he had no plans to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal.

Also, In the latest development surrounding political gridlock in Washington, talks on border security funding collapsed after Democratic and Republican lawmakers clashed over immigrant detention policy as they worked to avert another U.S. government shutdown.

“Global growth worries, absence of positive signs in U.S-China trade negotiations and reduction in the euro-zone growth forecasts have laid a strong foundation for gold,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.

Adding to a string of disappointing global economic data, especially the euro zone, official figures on Monday showed Britain’s economy slowed as expected in the final three months of last year, pushing growth in 2018 to its weakest in six years, as Brexit worries hammered investment.

Meanwhile, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw outflows for five straight sessions last week.

Among other precious metals, palladium fell 1.2 percent to $1,384.55 an ounce.

Spot silver dropped 0.8 percent to $15.69, while platinum was down 1.4 percent at $787.16 per ounce, after earlier touching its lowest in three weeks.

Reuters

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya