Investing.com - Gold prices headed higher on Wednesday as escalating tensions in the ongoing Sino-U.S. trade dispute boosted demand for safe-haven assets, although a firm U.S. dollar limited additional gains.
At 9:56 AM ET (13:56 GMT), gold futures for June delivery on the Comex division of the New York Mercantile Exchange, rose $4.85, or 0.4%, to $1,281.85 a troy ounce.
News that China is prepared to use rare earths to strike back in a trade war with the U.S. fueled concerns that the conflict would adversely impact the global economy at a time when weakening macro data is already raising alarms of an impending recession.
Investors scrambled to take risk off the table with sharp declines in global equities, while safe-haven assets such as bonds rallied.
“The twin circumstances of an incoming recession and a massive, trade war-related breakdown in the global supply chain have joined forces to lean heavily on risk sentiment,” Saxo Bank Chief Economist Steen Jakobsen wrote in a note.
But analysts from London Capital Group noted that dollar strength capped gains in the precious metal. A stronger greenback makes gold more expensive for holders of foreign currency.
“Technically, strong resistance can be seen at $1,286, a high that gold has unsuccessfully tested for the past three consecutive days,” they said.
In other metals trading, silver futures gained 0.5% at $14.395 a troy ounce by 9:57 AM ET (13:57 GMT).
Palladium futures were little changed at $1,337.05 an ounce, while sister metal platinum traded down 0.6% at $792.20.
In base metals, copper fell 1.2% to $2.663 a pound.