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Gold prices steady, buoyed by geopolitical worries

[BENGALURU] Gold was mostly steady on Friday amid weaker Asian stocks, with some investors gravitating towards safe-haven assets on political uncertainty in the United States and after a van mowed through crowds in Barcelona, killing 13 people.

Spot gold was nearly unchanged at US$1,287.34 per ounce by 0408 GMT, after climbing for two straight days.

US gold futures for December delivery were flat at US$1,293.10 per ounce.

Asian stock investors joined a global retreat from riskier assets on Friday and the US dollar wavered on growing doubts about US President Donald Trump's ability to fulfil his economic agenda.

Markets were further shaken as Spain mounted a sweeping anti-terror operation on Friday after a suspected Islamist militant drove a van into crowds in Barcelona, killing 13 people before fleeing.

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"Risk aversion is back on the table again... Market-watchers basically ignored the better-than-expected US initial jobless claims, and digested the unexpected terror attack in Barcelona amid the growing controversy in the US-centric political space," OCBC analyst Barnabas Gan wrote in a note.

There are increasing concerns around the Trump administration's ability to push ahead with its policies following the disbandment of two high-profile business advisory councils over the president's remarks on violence in Virginia.

"The ongoing discord coming out of Washington could prove supportive for gold as well, as this could pressure the dollar further just as the Fed is casting fresh doubts about its rate timetable," INTL FCStone analyst Edward Meir said.

Financial markets are warning of weakness in the US economy, so the Federal Reserve should be "very patient and judicious" as it considers whether to raise interest rates, Dallas Fed President Robert Kaplan said on Thursday.

The US dollar on Friday edged lower against the yen, while the euro was steady after dropping to a three-week low on Thursday after minutes of the European Central Bank's July 20 policy meeting showed policymakers were worried about a possible overshoot in the euro.

Gold is sensitive to rising interest rates because they push up bond yields, increasing the opportunity cost of holding non-yielding bullion, and tend to strengthen the dollar, in which gold is priced.

Spot gold faces resistance at US$1,291 per ounce and it may hover below this level or retrace towards support at US$1,271 again, Reuters technical analyst Wang Tao said.

Among other precious metals, silver was down 0.4 per cent at US$16.92 per ounce, while platinum was up 0.7 per cent at US$978.80 an ounce.

Palladium edged down 0.2 per cent to US$923.97, after hitting its highest since February 2001 at US$930.00 in the previous session.


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