Gold firm as US dollar, equities fall ahead of Trump-Xi meeting

[BENGALURU] Gold prices held firm on Thursday on the back of a weaker US dollar and as appetite for risky assets such as equities waned ahead of a potentially tense meeting between US President Donald Trump and his Chinese counterpart.

Spot gold inched down 0.1 per cent to US$1,253.75 per ounce by 0700 GMT. US gold futures were up 0.6 per cent at US$1,255.60, after climbing as much as one per cent to US$1,260.80 earlier in the day.

Investors were cautious ahead of the meeting between Mr Trump and Chinese President Xi Jinping due later on Thursday, the first between the world's two most powerful leaders.

Topping the agenda at Mr Trump's Mar-a-Lago resort in Florida will be whether he makes good on his threat to use US-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbour North Korea.

Spot gold hit US$1,261.15 on Tuesday, its highest since Feb 27, but has failed to breach a key 200-day moving average of US$1,258.

"It just hasn't shown any ability to break the 200-day moving average and clearly shows that the price action is not being driven in isolation but has been driven by the US dollar," said Jeffrey Halley, senior market analyst at Oanda.

"It is kind of looking like gold is running out of steam in the short term." Lingering fears of a possible trade war kept Asian markets on edge.

The US dollar index, which measures the greenback against a basket of currencies, fell 0.1 per cent to 100.460.

US Federal Reserve's March minutes on Wednesday showed most policymakers think the central bank should take steps to begin trimming its US$4.5 trillion balance sheet later this year as long as the economic data holds up.

Falling equities, driven by the Fed's hawkish tone, have supported gold and should prices decisively move above the 200-day moving average, more quantitative money could start coming in, said INTL FCStone analyst Edward Meir.

"A plethora of troubling geopolitical events, along with the upcoming French elections, still percolate in the background and have the capacity to provide an element of support to gold, at least over the short term."

Spot gold may rise to US$1,265 per ounce, as suggested by its wave pattern and a Fibonacci retracement analysis, Reuters technical analyst Wang Tao said.

Spot silver dropped 0.4 per cent to US$18.19 an ounce.

Platinum fell 0.7 per cent to US$953, while palladium rose 0.5 per cent to US$808.60. It hit a more than two-year high of US$815.70 in the prior session.

REUTERS