Gold prices were steady in early Asian trade on Friday amid renewed fears of a global trade war, while a firm dollar and positive US economic data weighed on the market.
Spot gold was nearly unchanged at $1,298.20 per ounce by 0356 GMT, while US gold futures for June delivery were down 0.2 per cent at $1,298 per ounce. Spot gold is down slightly this week.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1 per cent at 94.117.
Gold’s current price movement reflects the relatively calm attitude of investors, said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“These uncertainties are to be with us for quite some time, so sooner or later investors will get used to it,” To said, adding that he expected gold to trade in the $1,296-$1,305 range.
Fears of a global trade war emerged after the United States on Thursday went ahead with tariffs on aluminium and steel imports from Canada, Mexico and the European Union, ending the two-month exemption it had given earlier. Canada and Mexico retaliated against this decision.
Meanwhile, US President Donald Trump on Thursday played down the chances of a quick deal in getting North Korea to abandon its nuclear arms as a delegation from Pyongyang headed to meet him with a letter from North Korean leader Kim Jong Un, suggesting a proposed summit may be back on.
Political and economic tensions may support gold prices to a certain extent, but an interest rate hike from the US Federal Reserve this month may provide the metal some kind of resistance, To said.
US consumer spending accelerated in April and inflation continued to rise steadily, underpinning the case for a US interest rate hike this month.
Higher interest rates tend to boost the US dollar and push bond yields up, pressuring gold prices by increasing the opportunity cost of holding non-yielding bullion.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.52 per cent to 847.03 tonnes on Thursday, Reuters reported.
In other precious metals, spot silver gained 0.5 per cent to $16.42 an ounce, but was down about 0.5 per cent this week.
Platinum rose 0.6 per cent to $906.60 per ounce and palladium was 0.1 per cent higher at $986 an ounce. Both were headed for a second straight weekly gain.
