Gold prices slip on strong equities; trade jitters, US unrest limit losses

Gold eased on Tuesday, weighed down by gains in stock markets, but concerns over civil unrest in US cities and growing tensions between Washington and Beijing limited the decline.

Spot gold was down 0.2 per cent at $1,736.92 per ounce at 0947 GMT, having gained as much as 1 per cent on Monday to hit its highest since May 21. US gold futures were steady at $1,750.

“The US-China tensions support (gold) because of the safe-haven demand but there are also concerns about a second wave of the coronavirus,” Bank of China International analyst Xiao Fu said, adding investors were also worried about unrest in US cities and whether it would come under control.

“Gold is now range bound … The equity market rally has been capping further gains in gold,” Fu added.

World stocks climbed towards three-month highs as the global coronavirus recovery effort won out over the trade tensions and the unrest in the United States.

Concerns about deteriorating Sino-US relations increased after reports of an order from China’s government to halt US soybean purchases.

Bullion, which is widely viewed as a safe-haven investment during times of political and financial uncertainty, got further support after US President Donald Trump vowed to use the military to halt the violent protests in US cities.

Meanwhile, in a sign that the worst of the economic downturn from the coronavirus pandemic might be over, US manufacturing activity edged up from an 11-year low, and China’s factory activity unexpectedly returned to growth in May.

Reflecting investor sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5 per cent to 1,128.40 tonnes on Monday, the highest in seven years.

Elsewhere, palladium dropped 0.2 per cent to $1,958.25 per ounce, while platinum climbed 0.5 per cent to $851.46 and silver was unchanged at $18.27.

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