Gold prices edged up on Wednesday after falling as much as 1 per cent in the previous session, but Sino-US trade tensions continued to drag on the precious metal.
Fundamentals
Spot gold was up 0.1 per cent at $1,202.46 an ounce at 0112 GMT. Prices hit their highest since August 10 at $1,214.28 on Tuesday, but fell as much as 1 per cent later in the session. US gold futures were down 0.5 per cent at $1,208.90 an ounce on Wednesday.
US and Chinese officials had ended two days of talks last week with no major breakthrough as their trade war escalated with activation of another round of duelling tariffs.
The dollar, which had risen recently on safe-haven buying from investors nervous about the trade dispute and U.S. interest rate hikes, slipped to four-week lows on Tuesday after a trade deal between US and Mexico. The dollar index, which measures the greenback against a basket of currencies, was mostly steady on Wednesday at 94.756.
In recent months, investors have sought safety from global trade conflict in US Treasuries, which entails buying dollars. As long as the trade tensions between US and China continue to persist, the US dollar will benefit, hurting gold, analysts said.
US Treasury yields rose on Tuesday across maturities to weekly highs. Asian share markets were left in limbo on Wednesday as optimism over the US-Mexico trade deal was quickly replaced by caution ahead of a looming deadline on tariffs with China.
In Washington, Canada's main trade negotiator was in talks to preserve a three-nation North American Free Trade Agreement following Monday's deal between the United States and Mexico.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.62 per cent to 759.87 tonnes on Tuesday from Monday.