Bengaluru: Gold prices gained on Wednesday, as investors stayed away from risk assets after US slapped tariffs on $50 billion worth imports from China, raising the stakes in a growing trade showdown with Beijing.
Spot gold rose 0.2% to $1,334.44 per ounce as of 9.04am, after falling 0.6% in the previous session. US gold futures were up 0.1% at $1,338.10 an ounce.
The Trump administration on Tuesday announced 25% tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices.
“The markets will be looking out for what China will do in retaliation to such a move, that alone will have a huge potential in dragging the market sentiment and risk appetite,” said OCBC analyst Barnabas Gan.
China’s commerce ministry said on Wednesday it “strongly condemns and firmly opposes” the proposed US tariffs following the Section 301 probe and will take counter measures, according to the official Xinhua news agency.
“If there is any further intensification in the trade war issue and no quick resolution, we see gold prices could potentially bridge its $1,400 resistance level,” Gan said.
The dollar slipped and Asian share markets faltered on simmering fears of a Sino-US trade war.
“It seems that investors are not panicking as much as they were, aware that these are opening gambits that will ultimately need to be negotiated quietly and away from the headlines,” said INTL FCStone analyst Edward Meir. “We assume that between now and the time that the tariffs take effect, both sides will be hard at work in order to gain concessions from one another and thus avoid having to impose tariffs.”
In other precious metals, spot silver gained 0.2% to $16.41 an ounce. The metal on Tuesday shed 1.4%, its biggest daily loss in five weeks.
Platinum was down 0.3% at $921.20 an ounce, after falling to as low as $912 in the previous session, its lowest since late December. Palladium was down 0.2% at $927.60 after touching $924.50, its lowest since 9 October. Reuters