Gold inches higher on US-China tensions, recovery woes

[BENGALURU] Gold prices edged higher on Wednesday, supported by renewed US-China tensions and concerns over economic recovery, but a robust US dollar capped gains.

Spot gold rose 0.2 per cent to US$1,902.04 per ounce by 1am GMT.

US gold futures eased 0.1 per cent to US$1,905.60.

The dollar index hit an eight-week peak. A firmer dollar makes bullion more expensive for holders of other currencies.

US President Donald Trump told the United Nations General Assembly on Tuesday that China must be held accountable for having "unleashed" Covid-19 on the world, prompting Beijing to accuse him of "lies" and abusing the United Nations platform to provoke confrontation.

Top US economic policymakers opened the door on Tuesday to further aid for small businesses hit by the coronavirus-triggered recession, but differed over how broad it might extend and the manner in which it should be delivered.

Meanwhile, Chicago Fed president Charles Evans said the central bank still needed to discuss its new average inflation target but that it "could start raising rates before we start averaging 2 per cent".

Low interest rates tend to support gold, which is considered a hedge against inflation and currency depreciation.

The UK has imposed fresh set of curbs to tackle a second wave of Covid-19, with new restrictions lasting probably six months.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.05 per cent to 1,278.23 tonnes on Tuesday.

Silver fell 0.6 per cent to US$24.26 per ounce, platinum rose 0.3 per cent to US$869.64 and palladium slipped 0.8 per cent to US$2,203.15.

REUTERS