Gold Price Steadies Near $1,700 On Firm Dollar

Spot gold was steady at $1,699.49 per ounce by 0601 GMT (11:31 am in India), having gained over 1 per cent on Friday.

Gold Price Steadies Near $1,700 On Firm Dollar

US gold futures gained 0.4% to $1,707.90 per ounce

Gold prices steadied on Monday as a strong US dollar countered support from rising tensions between the United States and China over the coronavirus outbreak.

Spot gold was steady at $1,699.49 per ounce by 0601 GMT (11:31 am in India), having gained over 1 per cent on Friday after US President Donald Trump threatened to impose tariffs on China. US gold futures gained 0.4 per cent to $1,707.90.

US Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the virus emerged from a Chinese laboratory, but did not dispute US intelligence agencies' conclusion that it was not man-made.

His comments follow Mr Trump, who on Friday said raising tariffs on China is "certainly an option" as he considers ways to retaliate for the spread of the virus.

"Some sort of fears are there that the trade war might be ignited and such events are good for gold. All these comments from officials indicate a new round of hostility as far as the trade is concerned with China," said Avtar Sandu, senior commodities manager at Phillip Futures.

Gold had risen 18 per cent last year as the China-US trade dispute increased demand for the safe haven amid interest rates cuts by the US central bank.

The US dollar moved away from an over one-month low on Monday, making gold costlier for investors holding other currencies.

"US dollar demand is competing for safe-haven lustre in Asia this morning," said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.

On the macro front, investors will be watching out for the April US jobs report due on Friday.

"Beyond the rhetoric from Washington we would expect gold to consolidate until the non-farm payrolls figures are out. A decline in the (unemployment) numbers wouldn't be good for gold prices," Phillip Futures' Mr Sandu said.

The Federal Reserve has kept interest rates at near zero, with other central banks and governments taking similar measures to cushion their economies from the impact of the pandemic.

The widespread fiscal and monetary impetus will support bullion in the longer term as it is often seen as a hedge against inflation and currency debasement, analysts said.

Reflecting an appetite for gold, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.1 per cent to 1,067.90 tonnes on Friday.

Palladium rose 0.9 per cent to $1,915.99 per ounce, while platinum slipped 0.4 per cent to $757.30 and silver was down 0.5 per cent at $14.86.