Gold steady below 2-week peak but trade talk hopes weigh

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Spot gold was little changed at $1,521.16 per ounce, as of 0339 GMT, after climbing to its highest since Sept. 6 at $1,526.80 in the previous session. US gold futures were down 0.2% at $1,528.50 per ounce.

Gold prices were steady on Tuesday, having risen to a more than two-week peak in the previous session on global slowdown fears and tensions in the Middle East, while an improved Sino-US trade tone weighed on the yellow metal.

Spot gold was little changed at $1,521.16 per ounce, as of 0339 GMT, after climbing to its highest since Sept. 6 at $1,526.80 in the previous session.

US gold futures were down 0.2% at $1,528.50 per ounce.

“Both the countries (China and the United States) have given some indication again that an agreement might be reached and that is affecting gold a bit in a negative way but mostly it is trading in sidelines,” said Michael McCarthy, chief market strategist at CMC Markets. “If the talks fall apart again, it will support gold.”

Against a basket of currencies, the dollar index was 0.1% higher after U.S. Treasury Secretary Steven Mnuchin said US-China trade talks will resume in early October.

The tariff dispute between the world’s two largest economies has dragged on for well over a year, rattling investors and denting global growth, and driving the safe-haven metal up about 18% so far this year.

Concerns mounted over a slowing global economy after a survey out of the Euro zone on Monday showed business growth stalled this month, dragged down by shrinking activity in powerhouse Germany, where a manufacturing recession deepened unexpectedly.

If these macro conditions continue to deteriorate, gold will only move higher as the market may continue to price in more Fed accommodation, which will drive bond yields lower – making gold even cheaper to own, AxiTrader strategist Stephen Innes said in a note.

Meanwhile, tensions in the Middle East have escalated since an attack on Saudi Arabia’s oil facilities earlier this month, as the Pentagon ordered additional US troops to be deployed in the Gulf region, while Britain, Germany and France backed the United States and blamed Iran for the attacks.

Spot gold remains neutral in a range of $1,497-$1,524 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

Indicative of sentiment, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.61% to 908.52 tonnes on Monday, the highest since November 2016.

Elsewhere, spot palladium was flat at $1,653.77 per ounce, after it climbed to a record $1,664.50 on Monday.

Silver and platinum were down 0.3% each at $18.57 per ounce and $954.05, respectively.