Gold hits 1-wk high as trade concerns unnerve markets

New York (May 8) - Gold prices hit their highest level in more than a week on Wednesday as renewed concern over the U.S.-China trade dispute and its potential impact on global growth dented risk sentiment, spurring some demand for safe-haven assets.

Spot gold was up 0.2 percent at $1,287.20 per ounce, as of 0909 GMT, having hit their highest since April 26 at $1,287.94, earlier in the session.

U.S. gold futures edged 0.2 percent higher to $1,288.20 an ounce.

Some in the market expect the gold price rally to be limited, with the weakness in equity markets seen as temporary.

"So far Trump's tariff threat has had much bigger impact on the stock markets than precious metals. While gold is drawing support from the scenario, investors are not accumulating the metal," said Carlo Alberto De Casa, chief analyst with ActivTrades.

U.S. President Donald Trump tweeted on Sunday he would raise tariffs on $200 billion worth of Chinese goods, while Washington accused Beijing of backtracking from commitments made during trade negotiations. World shares held near five-week lows on Wednesday as investors moved into the safety of bonds, the Japanese yen and gold. Chinese Vice Premier Liu He will visit the United States on Thursday for trade talks and additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.

While gold has benefited from a rising demand for safe-haven assets, prices have not been able to significantly move up despite the given backdrop in global markets.

"Gold needs to break above the first resistance at $1,288 to see more recovery. The weakness in markets is seen as a temporary one and that's why we are not seeing a huge rally in the precious sector," ActivTrades' De Casa said.

After stabilizing around $1,280 levels, gold is seeing some upside momentum in the near term, analysts at bullion trader Wing Fung said in a research note, but added that the resistance at $1,300 will still be hard to break.

Spot gold may test resistance at $1,291 per ounce, a break above which could lead to a gain to the next resistance at $1,299, according to Reuters technical analyst Wang Tao. Despite weak buying in biggest bullion consumer China so far this year, analysts and traders expect resilient Indian buying to support physical demand.

Indians were expected to buy at least 10 percent more gold during the annual Hindu and Jain holy festival of Akshaya Tritiya than a year ago, supporting physical demand in Asia. Silver was steady at $14.91 an ounce, while platinum gained 0.1 percent to $864.90.

Palladium fell 0.6 percent to $1,318.61 an ounce.

Reuters