Gold prices held steady on Tuesday, supported by concerns over a slowdown in global
economic growth and uncertainty around
Brexit, although a firm
dollar pressured the safe-haven metal.
Fundamentals
Spot gold was mostly unchanged at $1,279.61 per ounce by 0050 GMT, while US gold futures fell 0.3 per cent to $1,278.90 per ounce.
As central banks stock up on policy ammunition in the face of a worsening global economic outlook, they are having to reassess one of their most delicate weapons - the 'forward guidance' they use to flag their intentions to the markets.
China took a big step last week on the long road toward recapitalisation of banks hobbled by stale loans, giving a first ever approval for a perpetual bond issue by a lender, but going by initial feedback "perps" could be difficult to sell.
China's economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising US tariffs, dragging 2018 growth to the lowest level in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown.
US markets were closed on Monday so trading was generally subdued overnight. However, equity prices in Europe and Latin America were hit after the data showing a slowdown in growth in China, the world's second biggest economy.
Adding to the gloom, the International Monetary Fund trimmed its global growth forecasts and a survey showed increasing pessimism among business chiefs as trade tensions loomed.
British Prime Minister Theresa May sought to break the parliamentary deadlock over Brexit on Monday by proposing to seek further concessions from the European Union on a plan to prevent customs checks on the Irish border.
The dollar's rise to a near two-week high weighed on gold, which has climbed more than 10 per cent since mid-August, largely because of equity market turmoil and a weak dollar.
Analysts said gold was also finding some support from expectations that the US Federal Reserve had reached the end of its monetary tightening and from a partial US government shutdown, which enters its 32nd day on Tuesday.
Venezuela's gold holdings in the Bank of England have jumped after it closed out a gold swap deal with Deutsche Bank, according to two sources, as Britain remains reluctant to release gold held for the troubled OPEC nation.
Barrick Gold Corp said on Monday that it was considering all options for Lumwana copper mine in Zambia as the country's proposed new mining taxes would make it challenging to generate adequate returns for all its stakeholders.