Gold slips to near two-week lows as dollar firms on trade angst

Gold prices fell to their lowest in nearly two weeks on Wednesday, pressured by a mild revival in the dollar after comments from the U.S. Trade Representative dampened expectations of a quick resolution to the U.S.-China trade dispute.

Spot gold was down 0.6 percent at $1,320.21 per ounce at 11:50 a.m. EST (1650 GMT). The yellow metal fell to its lowest since Feb. 15 at $1,319.15 earlier in the session.

U.S. gold futures fell 0.5 percent to $1,322.40 per ounce.

The dollar gained 0.2 percent on safe-haven bids after U.S. Trade Representative Robert Lighthizer said Washington`s issues with China are "too serious" to be resolved by Chinese promises to purchase more U.S. goods. [USD/]

A strong dollar, which had been the preferred safe-haven currency during the U.S.-China trade war, makes gold costlier for holders of other currencies.

"The metals are getting hit with the stronger dollar," said George Gero, managing director at RBC Wealth Management, adding that the longer-term outlook was still positive.

Providing a solid foundation for bullion was Federal Reserve chairman Jerome Powell`s reiteration that the central bank would remain "patient" while deciding the future of U.S. interest rates.

"Fed stating they will be patient with future rate hikes gives gold investors some confidence that there is still upside potential in the price of the metal," said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.

Gold has gained about 15 percent from a more than one-and-half-year low touched in mid-August of last year.

Investors are also monitoring the tensions between India and Pakistan, with the two countries ensnared in retaliatory attacks, prompting world powers to urge restraint.

"The escalation in Indo-Pak tensions, along with Michael Cohen`s testimony today could potentially provide increased equity volatility and provide a haven bid in gold, although this would likely be short lived," analysts at TD Commodities said in a note.

Meanwhile, spot palladium dropped 2.6 percent to $1,519 per ounce after setting a record high of $1,565.09 in the previous session.

The autocatalyst metal has climbed over 20 percent so far this year on a widening supply tightness, while threats of strikes by mineworkers in South Africa added further support.

Analysts, however, suggest the strong rally in prices within a short span could trigger a market correction, with the precious metal now slipping into overbought territory.

Elsewhere, silver fell 1.4 percent to $15.71 per ounce, while platinum was steady at $856 having earlier hit $871.94, its highest since early November.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)