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Gold Prices Rise but Firm Dollar Caps Gains

Published 05/29/2019, 01:25 AM
© Reuters.
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Investing.com - Gold prices rose on Wednesday in Asia as indications that the Sino-U.S. trade war is escalating boosted safe haven demand but a buoyant dollar capped gains in the precious metal.

Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, were up 0.3% at $1,280.75 per ounce by 1:25 AM ET (05:25 GMT).

Trade tensions ratcheted higher after the Global Times, an English-language Chinese newspaper, tweeted that China was seriously considering cutting exports of rare earth metals in response to the U.S.’s recent imposition of higher import tariffs on its goods and an effective boycott of telecoms giant Huawei.

It came after U.S. President Donald Trump said on Monday that Washington was not ready to make a deal with China yet.

The U.S. dollar index, which measures the currency against a basket of six peers, was almost unchanged at 97.820 having ended up 0.3% overnight. The index was trading about 0.5% off a two-year high of 98.371 hit on Thursday and is still up 1.8% for the year.

A stronger U.S. currency typically acts as a headwind for gold, making the dollar-denominated precious metal more expensive for holders of other currencies.

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