The price of gold fell on early Tuesday, failing to extend its gains yesterday when it added 1 percent. However, the trade spat between the United States and China and a sell-off in global stocks somehow limited the losses of the yellow metal.
U.S. gold futures dropped more than 0.3 percent to finish at $1,342.80 per ounce. Meanwhile, spot gold inched lower by 0.2 percent to settle at $1,338.51 an ounce after jumping as high as 1.3 percent on the previous session. This marks w spot gold’s biggest one-day percentage high in one week.
Wing Fung Financial Group’s head of research at Hong Kong Mark To said on the day that gold futures serve for investors risk aversion demand as of now and it will be well strengthened temporarily due to the volatility in the stock markets. He added that the recent trading range $1,300 to $1,350 per ounce for gold prices might slowly move up to $1,330 to $1,380 range due to risk aversion.
However, the markets risk-averse sentiment has been underpinning the yellow metal and it is usually perceived as an alternative investment during times on financial and political turmoils.
The bullion is also likely lower due to investors from China getting out from their positions before the holiday on Thursday and Friday. The three-day Qingming tomb-sweeping festival in the country will start this April 5. Stephen Innes from OANDA said the risk of a trade war will not leave sooner as the escalation in China looks like it has more bite than bark.