Gold price steadies but expects gains as geopolitical tensions rise
London (Apr 10) Gold prices were steady on Tuesday but poised for gains as investors awaited potential US action against the suspected use of chemical weapons in Syria, as well as more trade friction.
"Geopolitics is taking the main driving seat this week, so gold has potentially got some room for the upside," said Jonathan Butler, commodities analyst at Mitsubishi in London. "A lot will hinge on what is happening geopolitically between Russia, Syria, Iran and all sorts of other countries that could be potentially drawn into this."
Spot gold was barely changed, down 0.01% at $1,335.73 an ounce at 10.05am GMT, having risen to a near one-week high of $1,338.12 earlier in the session.
US gold futures dipped 0.1% to $1,339.10 an ounce. If gold breaks through resistance of $1,340, it could move back to the late-March highs just under $1,360, Butler said.
On Monday, US President Donald Trump promised quick, forceful action in response to a deadly, suspected chemical weapons attack in Syria, appearing to suggest a potential military response. Gold is often seen as an alternative investment during times of political and financial uncertainty.
Gold slipped from its intra-day peak on Tuesday after Chinese President Xi Jinping promised to lower import tariffs on certain products, helping soothe fears over an escalating trade row with the US.
Xi promised to open the country’s economy further and lower import tariffs on products including cars. His comments sent US stock futures, the dollar and shares higher. This dampened the appeal of gold, which is priced in dollars, as investors’ appetite for risky assets surged.
"The risk-aversion demand in the past few weeks has been very positive for gold, but I don’t think what President Xi has been saying is going to affect gold that much," said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
Markets are looking ahead to this week’s US Federal Reserve’s minutes on its last policy meeting and US consumer price index (CPI) data for cues on the pace of interest rate hikes this year.
In other precious metals, silver gained 0.2% to $16.48 an ounce. Platinum shed 0.4% to $928 an ounce, after gaining about 2% in the previous session, the most in nearly two months.
Palladium rose 0.1% to $930.72 an ounce. The automotive catalyst metal gained more than 3% on Monday, its biggest daily percentage rise since January 12.
Reuters
