Investing.com – Gold prices rallied to a more than six-week high as a slump in the dollar helped the precious metal hold onto gains despite easing concerns about the prospect of U.S.-China trade war.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose by $5.20, or 0.40%, to $1,355.30 a troy ounce as dollar continued its retreat.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal.
China and the U.S. “have quietly started negotiating” to improve U.S. access to Chinese markets, The Wall Street Journal reported, citing people with knowledge of the matter.
China reportedly considered the U.S.’s requests seeking a reduction of Chinese tariffs on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China's financial sector by American companies.
This comes amid growing investor consensus that Trump’s move to impose tariffs formed part of a negotiating tactic as several trading partners including South Korea, Canada, Mexico and EU have since been granted exemptions.
“As for the risk of a broader trade dispute, we think the odds here remain low as well,” Morgan Stanley said in a note clients. “More importantly, Europe has been exempted much like the President exempted Canada and Mexico from the steel and aluminium tariffs a few weeks ago." The bank added, "This all suggests these shots across the bow are being used more as negotiating tactics.”
Some market participants, suggested, however, that the 3.3% advance in gold prices relative to a 3.1% slump in silver prices so far this year serves as a negative economic indicator, raising safe-haven demand.
A higher gold-to-silver ratio is viewed by some investors as a negative economic indicator because market participants tend to favour gold in times of market turmoil and sell silver when they are concerned about slowdown in global growth stifling consumption.
In other precious metal trade, silver futures rose 0.80% to $16.72 a troy ounce, while platinum futures gained 0.29% to $956.80 an ounce.
Copper fell 0.77% to $2.970, while natural gas rose 1.22% to $2.67.