Gold holds steady above two-week low

Thursday, 23 May, 2019 - 05:58

Gold was little changed overnight after the minutes from the latest US Federal Reserve meeting were released, but the precious metal was trading above the two-week low hit in the last session as stock markets slid on fresh trade tensions.

Spot gold was steady at $US1,273.68 per ounce, having fallen to its lowest level since May 3 on Tuesday at $US1,268.97.

US gold futures settled 0.1 per cent higher at $US1,274.20.

The minutes from US Fed's last meeting showed policymakers agreed that their current patient approach to setting monetary policy could remain in place "for some time".

"Not many surprises here and not many were expected. I would note though that this Fed meeting happened before China backtracked on the trade talks. At the next meeting, almost certainly there will be more caution," said Tai Wong, head of base and precious metals derivatives trading at BMO.

Earlier this week, Fed Chair Jerome Powell said it would be premature to make a judgment about the impact of trade and tariffs on monetary policy.

Global financial markets fell as a reprieve in US trade restrictions on China's Huawei Technologies Co Ltd was countered by reports the White House is considering sanctions on Chinese video surveillance firm Hikvision.

US Treasury Secretary Steven Mnuchin said US officials were not currently scheduled to go to Beijing for the next round of trade negotiations, a day after the Chinese Ambassador to the United States, Cui Tiankai, said that Beijing was still open for talks.

"We have global growth concerns relating to trade frictions between the US and China, and expectations of lower interest rates down the year, but at the same time, the (US) dollar is stronger, which is not supportive for gold," said Jeff Klearman, portfolio manager at GraniteShares.

The US dollar index firmed near a one-month peak, making gold expensive for holders of other currencies.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4 per cent to 739.69 tonnes on Tuesday.

However, holdings have declined nearly seven per cent so far this year, indicating subdued investor interest in bullion.

On the technical side, spot gold may now test support at $US1,264 per ounce, a break below which could open the way towards $US1,244, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver was steady at $US14.44 per ounce, while palladium edged 0.2 per cent lower to $US1,317.52.

Platinum slipped 1.7 per cent to $US799.39 an ounce, having touched its lowest since February 18 at $US798.50 earlier in the session.