Gold prices rose on Wednesday along with equities as the US dollar softened, with markets showing little worry over the latest escalation in the US-China trade war. Spot gold climbed 0.4 percent to $1,202.32 an ounce by 0656 GMT. US gold futures were up 0.3 percent at $1,207 an ounce.
China and the United States plunged deeper into their trade feud on Tuesday after Beijing added $60 billion in US products to its import tariff list in retaliation for President Donald Trump's planned levies on $200 billion in Chinese goods.
"The US decision to impose a 10 percent tariff - as opposed to a 25 percent one (expected) - has encouraged investors in the sense there could be hope for a future compromise on trade," said John Sharma, an economist at National Australia Bank. Gold prices have declined about 12 percent since April, hurt by the intensifying US-China trade dispute and on rising US interest rates.
"People are following the US dollar and looking for clues from the upcoming Federal Reserve meeting later this month," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. Spot gold may retest a resistance at $1,202 per ounce, with a good chance of breaking above this level and rising towards $1,208, according to Reuters technical analyst Wang Tao.
"For the short and medium-term, gold is likely to trade range bound between $1,190-$1,210. There is some physical demand in Shanghai and Hong Kong," Fung said.