Gold prices held steady during Asian trade on Tuesday as investors remained on the sidelines amid expectations of a US interest rate hike this month and on fears of an escalation in the Sino-US trade war. Spot gold was mostly unchanged at $1,195.79 an ounce at 0654 GMT. US gold futures rose 0.1 percent to $1,201.60.
"The precious metal has shown excruciating weakness as the US economy demonstrated a stellar performance in Q2 2018," said Benjamin Lu, commodities analyst at Phillip Futures. "The imposition of increased tariffs (between the United States and China) will indefinitely damage global economic conditions in the longer term ... However, safe-haven demand remains weak for the shorter term as markets fixate on stronger dollar prospects," Lu said.
"With the greenback supported by expectations of higher US interest rates, this may translate to nothing but further pain for gold," said Lukman Otunuga, research analyst at FXTM, adding that spot prices could drop to $1,185-$1,160 levels in the short- to medium-term.
Meanwhile, physical gold buying waned slightly in Asia this week as investors waited to see if prices would fall further, traders said. The yellow metal is finding strong resistance at $1,200, with investors selling into any rallies that threaten to push it above that level, ANZ analysts said in a research note.