Gold prices inched higher on Monday, extending their recovery from a 17-month low, amid lingering worries over the U.S.-China trade conflict, while a stronger U.S. dollar capped the safe haven’s gains.
Spot gold was up 0.2 percent at $1,215.71 an ounce at 0410 GMT, building on its 0.5 percent gain on Friday.
U.S. gold futures were little changed at $1,223.7 an ounce.
Gold prices rebounded on Friday from a 17-month low of $1,204 per ounce as dollar slipped after data showed U.S. job growth slowed in July.
The dollar also weakened against the yuan on Friday after the Chinese central bank sought to stabilize its currency.
The greenback, however, regained footing on Monday and strengthened against major peers. [USD/]
China proposed retaliatory tariffs on $60 billion worth of U.S. goods on Friday, further escalating a bitter trade conflict, after the Trump administration sought to ratchet up pressure for trade concessions by proposing a higher 25-percent tariff on $200 billion worth of Chinese imports.
While the intensifying trade spat has been one of the reason gold prices have been supported above the $1,200 handle, the trade issues have also been playing off into a more expensive dollar rather than higher gold prices, Gan said.
Spot gold may retest a support at $1,206 per ounce, a break below which could cause a loss to the next support at $1,194, Reuters technicals analyst Wang Tao said.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.26 percent to 794.90 tonnes on Friday.
Hedge funds and money managers added a hefty 13,931 contracts to their net short position, bringing it to 41,087 contracts, the biggest since records became publicly available in 2006, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.