Gold prices gain as US-China trade war takes toll

Gold prices rose on Monday amid concerns the Sino-US trade war had started to take its toll on the US economy, weakening the dollar and raising hopes of a US Federal Reserve interest rate cut.

FUNDAMENTALS

Spot gold had edged uo 0.2 per cent to $1,286.89 per ounce as of 0129 GMT.


US gold futures also gained 0.2 per cent, to $1,285.50 an ounce.

The US dollar was little changed against a basket of six major currencies, having fallen off a two-year peak in the previous session after orders for US-made capital goods fell, further indicating that manufacturing and the broader economy are slowing, due in part to the US-China trade dispute.

China on Friday denounced US Secretary of State Mike Pompeo for fabricating rumours after he said the chief executive of China's Huawei Technologies Co Ltd was lying about his company's ties to the Beijing government.

Escalating trade tensions and weak data have fuelled expectations of a rate cut from the US Federal Reserve.

Over the weekend, Trump repeated a complaint that the Federal Reserve's policies had kept US economic growth from reaching its full potential.

Asia stocks edged up early on Monday, while the euro barely budged in early Monday trade after pro-European Union parties held on to two-thirds of seats in the EU parliament elections, limiting gains in nationalist opponents.

Parties committed to strengthening the European Union held on to two-thirds of seats in the EU parliament, official projections from the bloc's elections showed on Sunday, though far-right and nationalist opponents saw strong gains.

Hedge funds and money managers sharply reduced their net long positions in COMEX gold in the week to May 21, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Gold prices in India flipped into premiums last week on firmer demand in the domestic market, while buyers in top consumer China took advantage of weaker bullion prices and stepped up purchases.

Gold exports from Mali increased by 15.4 per cent to 61.63 tonnes in 2018, up from 53.4 tonnes in 2017, the West African nation said on Friday, mostly owing to stronger industrial production.