Gold prices rose on Tuesday as risk appetite faded after getting a boost from an agreement between the United States and Canada to salvage a North American free trade deal.
Asian stocks fell, with MSCI’s broadest index of Asia-Pacific shares outside Japan declining 1 percent after a steady start, as cautious views on the global economy curbed risk sentiment.
Spot gold was up 0.4 percent at $1,192.62 as of 0449 GMT, while U.S. gold futures were 0.4 percent higher at $1,196.40 an ounce.
“Prices have hovered around $1,190/oz and there is some demand from speculators and physical buyers at this level,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Optimism surrounding a last-minute deal between the United States and Canada on Sunday to salvage NAFTA as a trilateral pact with Mexico, had increased the appetite for riskier assets on Monday.
“Gold was assisted by a largely stable U.S. dollar index (on Tuesday),” said National Australia Bank economist John Sharma said.
“Gold is likely to hover around $1,180-$1,210 an ounce in the near term. It will need a circuit breaker such as a sharp fall in equities or some other global event to break out of its range. Of course, the U.S. dollar is key here.”
The dollar index against a basket of six major currencies was flat on Tuesday.
Gold has fallen about 13 percent from its April high, largely because of the stronger dollar, which has been boosted by a vibrant U.S. economy and fears of a global trade war.
“I don’t see the U.S. dollar doing much ahead of Friday’s non-farm payroll data. I look for that key print to drive the pace of the U.S. Federal Reserve repricing rates higher, which I think will boost the dollar’s appeal,” said Stephen Innes, APAC trading head at OANDA in Singapore.
Market participants will also be watching out for any additional cues on the pace of interest rate hikes from Fed Chairman Jerome Powell who will be speaking on “The Outlook for Employment and Inflation” before the National Association for Business Economics later in the day.
The Fed raised rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.
Meanwhile, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.28 percent to 740.17 tonnes on Monday. It has fallen over 4 million ounces since hitting a peak in late April.
Among other precious metals, silver rose 0.7 percent to $14.56 an ounce.
Palladium was up 0.4 percent at $1,060.60, while platinum rose 0.5 percent to $826.0 per ounce.
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