Gold prices eased after hitting a three-month peak on Tuesday on news China was open to negotiating a resolution of its trade dispute with the United States, while rising expectations that the US Federal Reserve will cut interest rates provided underlying support. China's commerce ministry on Tuesday urged dialogue and negotiation to resolve the trade differences, which have roiled financial markets.
Spot gold eased 0.2% to $1,322.67 per ounce as of 12:03 a.m. EDT (1603 GMT), after touching its highest since Feb. 27 at $1,328.98 earlier in the session. US gold futures were steady at $1,327.50 per ounce. "Headlines have come up saying US-China trade dispute can be negotiated over talks which is pushing gold down," said Afshin Nabavi, senior vice president at MKS SA.
Gold has climbed over 4% since hitting a one-week low of $1,274.44 an ounce last week mainly on the back of escalating trade tensions and expectations that Fed would cut rates to offset the impact of the US-China trade war. The US central bank will respond "as appropriate" to the risks posed by a global trade war and other recent developments, Fed Chairman Jerome Powell said on Tuesday in remarks that seemed to open the door to the possibility of a rate cut. Lower interest rates cut the opportunity cost of holding non-yielding commodities, while gold also tends to benefit from growth concerns as an alternative to cyclical assets like stocks.
Reflecting increased investor interest in bullion, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 2.2% on Monday, its biggest one-day percentage gain since July 2016. Among other precious metals, silver inched down 0.2% to $14.75 per ounce, after touching a more than three-week high of $14.84 in the session. Platinum fell 0.2% to $819.13 per ounce after hitting a two-week high of $825.78. The metal had marked its biggest intraday percentage gain in 2-1/2 years on Monday. Palladium jumped 1.62% to $1,344.90 per ounce.
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