Gold prices edged downward on Tuesday as investors flocked to the dollar and US government bonds amid steep declines in global stock markets, denting appeal for non-interest bearing bullion. Spot gold was down 0.3 percent at $1,220.01 per ounce at 1:35 p.m. EST (1835 GMT), putting it on course to snap a five-session winning streak.
US gold futures settled down $4.10, or 0.3 percent, at $1,221.20. "It seems like most people are leaving the stock markets, flocking into bonds and ignoring the gold market at this moment," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, adding that the precious metal was also under pressure from a stronger dollar.
The dollar rallied from a two-week low and benchmark US Treasury yields dipped to seven-week lows as stock market declines boosted global demand for safe-haven US Treasury debt and the dollar. A stronger dollar makes gold, which offers no yield to investors, more expensive for users of other currencies.
Global stock markets have suffered in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum, and international trade tensions. This has partially helped bullion prices recover about 6 percent from 19-month lows hit in mid-August. The yellow metal earlier on Tuesday hit its highest level since Nov. 7 at $1,228.79.
Fears of a slowing global economy, concerns surrounding Brexit and Italy's fiscal situation, and uncertainty regarding the China-US trade negotiations are supporting gold prices, said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.
"I expect gold to move lower if any of the current issues are resolved." Investors are now keeping a close eye on a Group of 20 leaders' summit later this month in Argentina where US President Donald Trump is expected to meet with Chinese President Xi Jinping to discuss the bilateral trade dispute.
While both leaders have expressed optimism about resolving their respective issues ahead of the meeting, a top Chinese diplomat in veiled criticism of Washington said on Monday that the APEC summit's failure to agree on a communique resulted from certain countries "excusing" protectionism. Meanwhile, holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.16 percent to 760.86 tonnes on Monday.
Among other precious metals, silver was down 1 percent at $14.28 an ounce, after hitting $14.49, its highest level since Nov. 8. Palladium fell 2 percent to $1,137.50 per ounce, after hitting a record high of $1,185.40 on Friday. Platinum dipped 1.8 percent to $837.50 per ounce. Trading volumes are expected to remain subdued before the US Thanksgiving holiday on Thursday.