Gold holds steady; Sino-US trade talks in focus

  • Traders await U.S. CPI data due Thursday
  • Platinum hits two-week high on Thursday
Gold bars sit in a vault at the Perth Mint Refinery, operated by Gold Corp., in Perth, Australia, on Thursday, Aug. 9, 2018.
Carla Gottgens | Bloomberg | Getty Images
Gold bars sit in a vault at the Perth Mint Refinery, operated by Gold Corp., in Perth, Australia, on Thursday, Aug. 9, 2018.

Gold prices on Thursday held steady near a more than one-week high hit in the previous session, amid hopes for a new round of U.S.-China trade talks, but a firmer dollar kept gains in check.

Spot gold rose 0.5 percent at $1,211.71 an ounce. The bullion gained 0.7 percent in the previous session, in its biggest single-day rise since Aug. 24.

Senior U.S. officials sent an invitation to their Chinese counterparts to hold another bilateral trade meeting, raising speculation about a subtle shift in Washington's policy.

The outreach comes as more than 85 U.S. industry groups launched a coalition on Wednesday to take a fight public against President Donald Trump's trade tariffs.

"Signs of movement in Sino-U.S. trade talks is the proximate cause (for steady prices), with a market that is still short and probably more sensitive to news, favouring the upside for gold," said Nicholas Frappell, global general manager at ABC Bullion, Australia.

The months-long trade rift between U.S. and China has prompted investors to buy the U.S. dollar in the belief that the United States has less to lose from the dispute. This has driven investors towards record short positions in Comex gold and heavy liquidations in gold exchange traded funds.

Gold prices have fallen nearly 12 percent since a peak in April amid intensifying global trade tensions and under pressure from rising U.S. interest rates.

"Gold is trading entirely on the mercy of the U.S. dollar ... to judge gold by any other metric in this environment provides an indecisive, inconclusive and highly inconsequential signal," said Stephen Innes, Asia-Pacific trading head for OANDA.

The dollar index against a basket of six major currencies stood was up 0.1 percent at 94.927.

"While gold prices continue to track the dollar, any positive news from the U.S.-China talks could benefit gold," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Elsewhere, the European Central Bank and the Bank of England will hold policy meetings later in the day, but both are widely expected to leave interest rates unchanged.

Cross-asset traders were waiting for U.S. consumer prices index data due later on Thursday for cues on the U.S. dollar's next move, Innes said.

The CPI data comes after soft U.S. wholesale price data undermined the case for a faster pace of policy tightening by the Fed. The U.S. central bank is widely expected to raise benchmark interest rates at its September meeting.

Among other precious metals, spot silver rose 1 percent to $14.35.

Platinum was up 0.8 percent at $804.74 after touching a two-week high of $805.30. Palladium gained 1 percent to $984.50.