· Gold prices rose alongside other safe-haven assets overnight as the trade rift between the United States and China showed no sign of cooling, with investors fearing a global economic slowdown.
· Spot gold rose 0.2 per cent to $US1,281.30 per ounce and US gold futures settled up 0.3 per cent at $US1,281.
· "It is not just the trade war but the status of US, Chinese and the European economies and Brexit hanging around there.In this kind of environment, investors and corporations are not quite sure how to play this market," said Jeffrey Christian, managing partner of CPM Group.
"Investors are confused whether to go long stocks or short stocks; long bonds or short bonds. So, they are siding with the precious metals. We have also seen a decline in the US stock markets for the past couple of days."
· Risk aversion has increased globally in recent days as fears of world recession resurfaced amid disappointing macro data in major economies.
· Equity markets sank worldwide and US Treasury yields dipped to 20-month lows as investor sentiment soured over growing global growth worries.
· Fuelling tensions between the US and Chinan, Chinese newspapers warned on Wednesday that Beijing authorities were ready to use rare earth metals to strike back at the United States in their prolonged dispute.
· This comes two days after US President Donald Trump said his country was not yet prepared to strike a deal.
· "Gold rises on trade angst but remains the least preferred safe-haven as investors flee to bonds. The yellow metal has delivered limited gains on growing recessionary concerns, but that could change on the break of $US1,300 an ounce," OANDA senior market analyst Edward Moya said in a note.
"The (US) dollar's run will also hamper gold, but we could see that coming to an end, or at least a break, when the Federal Reserve admits the recent dip with inflation was not transitory. Rate cuts are priced in by the financial markets, the Fed just needs to capitulate."
· Lower US interest rates put pressure on the US dollar and bond yields, increasing the appeal of non-yielding bullion.
· The US dollar index, which has been competing with bullion as the investment of choice to hedge against the trade tensions, held near a one-week high.
· Among other precious metals, silver gained 0.7 per cent to $US14.44 per ounce. The metal had fallen to $US14.25 in the last session, its lowest since early December.
Platinum fell 0.3 per cent to $US793.09 per ounce, after earlier falling to its lowest since February 15 at $US787.
Palladium jumped 1.1 per cent to $US1,350.52 per ounce.
Reference: Business News
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