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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 7, 2019. REUTERS/Brendan McDermid

Gold stays near six-year high on global political uncertainty

Bengaluru — Gold prices held steady on Tuesday as uncertainties surrounding US-China trade relations and Britain’s departure from the EU offset pressure from a stronger dollar.

Spot gold was down 0.1% at $1,529.40/oz at 11.45am GMT, but still not far off its more than six-year high of $1,554.56/oz. US gold futures were up 0.6% at $1,538.60.

“We are having a battle right now against multiple layers of uncertainties in the market and a strong dollar,” Saxo Bank commodity strategist Ole Hansen said.

“The trade talks between the US and China are going nowhere. The political debacle in the UK with Brexit, where we are potentially facing another vote before the day is over, is adding enough underlying support to gold to offset the strength in dollar.”

The dollar climbed to a more than two-year high against other major currencies, making dollar-denominated gold costlier for investors holding other currencies.

On the trade front, China has lodged a complaint at the World Trade Organization over US import duties, trashing the latest tariff actions as violating the consensus reached by leaders of both countries at a meeting in Osaka.

In the UK, legislators will decide on Tuesday whether to move towards a snap election when they vote on the first stage of their plan to block Prime Minister Boris Johnson from pursuing a no-deal Brexit.

But analysts said that fears of a slowing global economy, negative yielding debts around the world and hopes for interest rate cuts by global central banks provided support for gold.

“Given this week’s economic calendar is jam-packed with crucial economic releases that will shape monetary policy expectations for the September 18 federal open market committee meeting, gold traders are trading very delicately waiting for more convincing US economic signals,” VM Markets managing partner Stephen Innes said in a note.

Investors are awaiting the US manufacturing survey by the Institute for Supply Management (ISM) for some guidance on US economic conditions.

Federal fund futures implied traders saw a 91% chance of a 25 basis-point rate cut by the US Federal Reserve this month.

“Rate cut will happen almost no matter what kind of economic data we’re going to be presented with from now on until the Fed meeting but any acceleration to the weaker side could increase the expectations of how big the cut would be,” Saxo Bank’s Hansen said.

Silver slipped 0.1% to $18.44/oz. Platinum was up 0.8% at $937.43/oz, while palladium dipped 0.4% to $1,525/oz.

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