LONDON: Gold prices edged higher on Tuesday after China and the United States threatened to impose fresh tariffs on each other, boosting the precious metal’s safe-haven appeal. US President Donald Trump threatened to impose a 10 per cent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

The move raised concerns about the prospects for global growth amid a trade war and triggered a selloff in equities while lifting the Japanese yen and the dollar index. Gold prices can gain during times of financial and political uncertainty as the metal is seen as a safe place to park assets, alongside the yen.

“Gold is up slightly despite a higher dollar and that suggests that there is some safe-haven demand going into gold prices on the back of the trade dispute,” said Capital Economics commodities economist Simona Gambarini.

Spot gold was up 0.1pc at $1,279.38 an ounce by 1042 GMT while US gold futures for August delivery were 0.1pc higher at $1,281.70 per ounce.

But rising interest rates in the United States this year limited scope for upside in the precious metal, Gamba­rini said. Higher US rates tend to boost the dollar and weigh on gold, in which it is priced.

“We still think that the US Fed tightening and a strong dollar will prevent the gold price from rallying much further. We don’t expect a fall but we don’t expect it to rally either,” she said.

Meanwhile, in other precious metals, silver was down 0.2pc at $16.36 an ounce, after earlier hitting the lowest since June 1 at $16.32. Hedge funds and money managers raised their net long positions in COMEX silver contracts to its strongest in 6-1/2 months, by 35,882 contracts to 40,177 contracts, data showed on Friday. Platinum fell 0.3pc to $878.50 an ounce, having earlier touched its lowest since mid-December at $873. Palladium was down 0.8pc at $981.60 an ounce, after marking its lowest since May 30 at $975.15 overnight.

Published in Dawn, June 20th, 2018