Gold slips, holds near $1,300, ahead of trade data

Gold futures prices slipped Wednesday ahead of U.S. trade data, to hug the closely watched $1,300 line.

Gold settled higher Tuesday for the first time in three sessions, to reclaim $1,300-an-ounce level as the U.S. dollar turned lower for the week, helping the precious metal recoup some investment interest. Gold’s settlement Monday at $1,297.30 marked the lowest since May 23.

Data on the trade deficit for April are due for release at 8:30 a.m. Eastern Time, along with readings on productivity and unit labor costs for the first quarter.

Investors may have gotten signs of a trade thaw after Treasury Secretary Steven Mnuchin reportedly urged President Donald Trump to exempt Canada from metals tariffs at a meeting Tuesday. That adds to a report Wednesday that China had offered to buy some $70 billion of U.S. goods to get the Trump administration to cool its tariff threats.

Still, some tensions could still be simmering after Mexico revealed which U.S. products it is targeting for import tariffs—around $3 billion for goods including apples and bourbon—in retaliation for U.S. duties on Mexican steel and aluminum.

Group of 7 nations will hold talks in Canada on Friday and Saturday, where tariffs and trade are likely to be discussed. This weekend’s rebuke by G-7 finance ministers of the Trump administration’s trade tariffs could add some stress to the gathering.

“Global trade war is the only factor providing the support for the gold price,” said Naeem Aslam, analyst with Think Markets. “Retaliation was the very act which traders had in their mind, a direct consequence of Trump’s action.”

Gold eased even as the benchmark ICE U.S. Dollar Index fell 0.3% at 93.60 early Wednesday, while the yield on the benchmark 10-year Treasury note  was a tick higher at 2.953%, a negative factor for non-yielding bullion.

Rising real interest rates impact the opportunity costs of holding gold because the metal provides no yield, and entices investors to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar, which usually moves in the opposite direction of the gold price.