Gold was trading close to a more than one-week low on Thursday, pressured by a stronger dollar, though concern over the Sino-U.S. trade conflict and the global economy kept prices above a $1,300 support level.
Spot gold was steady at $1,306.21 an ounce at 1153 GMT after touching its lowest since Jan. 29 at $1,302.11. Prices fell 0.7 percent in the previous session in their biggest one-day drop since Jan. 18.
U.S. gold futures were down 0.3 percent at $1,310.70.
“Despite concerns of slowing global economic growth, it seems the dollar is providing some headwinds for gold at this stage,” said Ross Norman, chief executive at Sharps Pixley.
“Effectively, this type of correction is not a bad thing, but broadly speaking the bull run is very much in place.”
Economic concerns were brought into sharper focus as India cut interest rates unexpectedly and data showed Germany’s economy slowed in December, strengthening fears of a broader slump in Europe.
Gold rose to its highest since late April last week after the U.S. Federal Reserve kept interest rates steady, but it has since lost ground as the dollar has firmed.
The dollar index, which tracks the greenback against major currencies, was on course for a sixth session of gains and trading close to a two-week high, making bullion more expensive for holders of other currencies.
“Uncertainty over U.S.–China trade relations and the potential for another U.S. government shutdown continue to underpin interest toward $1,300 and should see supportive price action remain over the near term,” MKS PAMP Group said in a note. In his State of the Union address U.S. President Donald Trump repeated his promise to build a border wall with Mexico, raising the prospect of another U.S. government shutdown.
While Trump did not offer much clarity on the trade row, U.S. Treasury Secretary Steven Mnuchin said on Wednesday that he and other U.S. officials will travel to Beijing next week aiming to clinch a deal.
“It would be interesting to see whether a test of the $1,300 support level would attract the bulls and confirm the positive momentum of the last few months,” ActivTrades chief analyst Carlo Alberto De Casa wrote in a note.
Reflecting investor sentiment in gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell for a fourth straight session on Wednesday.
Among other precious metals, palladium gained 0.3 percent to $1,376.32 an ounce, silver rose 0.2 percent to $15.69 and platinum was down about 0.4 percent at $799.54 after touching its lowest since Jan. 25.
